Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 29, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | STARWOOD PROPERTY TRUST, INC. | |
Entity Central Index Key | 1,465,128 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 238,048,384 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets: | ||
Cash and cash equivalents | $ 404,820 | $ 368,815 |
Restricted cash | 41,131 | 23,069 |
Loans held-for-investment, net | 5,693,452 | 5,973,079 |
Loans held-for-sale at fair value | 237,106 | 203,865 |
Loans transferred as secured borrowings | 93,268 | 86,573 |
Investment securities ($378,461 and $403,703 held at fair value) | 898,803 | 724,947 |
Properties, net | 1,232,855 | 919,225 |
Intangible assets ($83,301 and $119,698 held at fair value) | 177,053 | 201,570 |
Investment in unconsolidated entities | 200,541 | 199,201 |
Goodwill | 140,437 | 140,437 |
Derivative assets | 42,692 | 45,091 |
Accrued interest receivable | 30,036 | 34,314 |
Other assets | 118,050 | 102,479 |
Variable interest entity ("VIE") assets, at fair value | 80,076,117 | 76,675,689 |
Total Assets | 89,386,361 | 85,698,354 |
Liabilities: | ||
Accounts payable, accrued expenses and other liabilities | 140,612 | 156,805 |
Related-party payable | 20,318 | 40,955 |
Dividends payable | 115,013 | 114,947 |
Derivative liabilities | 17,870 | 5,196 |
Secured financing agreements, net | 4,476,221 | 3,980,699 |
Convertible senior notes, net | 1,334,424 | 1,323,795 |
Secured borrowings on transferred loans | 94,668 | 88,000 |
VIE liabilities, at fair value | 79,087,142 | 75,817,014 |
Total Liabilities | 85,286,268 | 81,527,411 |
Commitments and contingencies (Note 21) | ||
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, 242,653,861 issued and 238,046,976 outstanding as of June 30, 2016 and 241,044,775 issued and 237,490,779 outstanding as of December 31, 2015 | 2,427 | 2,410 |
Additional paid-in capital | 4,220,887 | 4,192,844 |
Treasury stock (4,606,885 shares and 3,553,996 shares) | (92,104) | (72,381) |
Accumulated other comprehensive income | 32,627 | 29,729 |
Accumulated deficit | (103,373) | (12,286) |
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,060,464 | 4,140,316 |
Non-controlling interests in consolidated subsidiaries | 39,629 | 30,627 |
Total Equity | 4,100,093 | 4,170,943 |
Total Liabilities and Equity | $ 89,386,361 | $ 85,698,354 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Consolidated Balance Sheets | ||
Investment securities held at fair value | $ 378,461 | $ 403,703 |
Intangible assets held at fair value | $ 83,301 | $ 119,698 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 242,653,861 | 241,044,775 |
Common stock, shares outstanding | 238,046,976 | 237,490,779 |
Treasury stock, shares | 4,606,885 | 3,553,996 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues: | ||||
Interest income from loans | $ 122,557 | $ 118,292 | $ 240,089 | $ 236,721 |
Interest income from investment securities | 15,301 | 23,810 | 34,704 | 51,554 |
Servicing fees | 23,312 | 30,154 | 48,003 | 58,411 |
Rental income | 37,843 | 5,014 | 70,520 | 7,686 |
Other revenues | 979 | 1,390 | 2,169 | 3,137 |
Total revenues | 199,992 | 178,660 | 395,485 | 357,509 |
Costs and expenses: | ||||
Management fees | 23,767 | 26,821 | 48,730 | 54,789 |
Interest expense | 57,635 | 49,799 | 114,155 | 100,333 |
General and administrative | 35,409 | 41,404 | 68,207 | 76,668 |
Acquisition and investment pursuit costs | 2,888 | 4,867 | 4,173 | 6,053 |
Costs of rental operations | 15,852 | 1,211 | 28,507 | 2,909 |
Depreciation and amortization | 19,073 | 5,828 | 37,833 | 9,913 |
Loan loss allowance, net | 2,029 | 2,661 | 1,268 | 2,978 |
Other expense | 100 | 375 | ||
Total costs and expenses | 156,653 | 132,591 | 302,973 | 254,018 |
Income before other income (loss), income taxes and non-controlling interests | 43,339 | 46,069 | 92,512 | 103,491 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 50,707 | 55,873 | 46,540 | 103,734 |
Change in fair value of servicing rights | (12,191) | (2,652) | (18,930) | (4,194) |
Change in fair value of investment securities, net | 1,319 | 1,446 | 2,072 | 947 |
Change in fair value of mortgage loans held-for-sale, net | 13,235 | 10,831 | 20,126 | 31,962 |
Earnings from unconsolidated entities | 4,479 | 8,951 | 8,544 | 15,041 |
(Loss) gain on sale of investments and other assets, net | (90) | 209 | 155 | 17,407 |
Gain (loss) on derivative financial instruments, net | 20,253 | (19,530) | (4,465) | 5,093 |
Foreign currency loss, net | (16,988) | 20,854 | (17,366) | (9,453) |
Total other-than-temporary impairment ("OTTI") | (54) | |||
Noncredit portion of OTTI recognized in other comprehensive income | 54 | |||
Loss on extinguishment of debt | (629) | (5,921) | ||
Other income, net | 8,714 | 10 | 10,729 | 55 |
Total other income (loss) | 69,438 | 75,363 | 47,405 | 154,671 |
Income before income taxes | 112,777 | 121,432 | 139,917 | 258,162 |
Income tax provision | (706) | (3,792) | (800) | (19,743) |
Net income | 112,071 | 117,640 | 139,117 | 238,419 |
Net income attributable to non-controlling interests | (598) | (492) | (987) | (908) |
Net income attributable to Starwood Property Trust, Inc. | $ 111,473 | $ 117,148 | $ 138,130 | $ 237,511 |
Earnings per share data attributable to Starwood Property Trust, Inc.: | ||||
Basic (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.58 | $ 1.03 |
Diluted (in dollars per share) | 0.47 | 0.49 | 0.58 | 1.02 |
Dividends declared per common share (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 112,071 | $ 117,640 | $ 139,117 | $ 238,419 |
Other comprehensive (loss) income (net change by component): | ||||
Cash flow hedges | (48) | 123 | (321) | (140) |
Available-for-sale securities | 5,951 | (1,857) | 2,551 | (9,820) |
Foreign currency remeasurement | (6,733) | 8,273 | 668 | (35) |
Other comprehensive (loss) gain | (830) | 6,539 | 2,898 | (9,995) |
Comprehensive income | 111,241 | 124,179 | 142,015 | 228,424 |
Less: Comprehensive income attributable to non-controlling interests | (598) | (492) | (987) | (908) |
Comprehensive income attributable to Starwood Property Trust, Inc. | $ 110,643 | $ 123,687 | $ 141,028 | $ 227,516 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total Starwood Property Trust, Inc. Stockholders' Equity | Common stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interests | Total |
Balance at Dec. 31, 2014 | $ 3,860,856 | $ 2,248 | $ 3,835,725 | $ (23,635) | $ (9,378) | $ 55,896 | $ 22,056 | $ 3,882,912 |
Balance (in shares) at Dec. 31, 2014 | 224,752,053 | 1,213,750 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from public offering of common stock | 326,142 | $ 138 | 326,004 | 326,142 | ||||
Proceeds from public offering of common stock (in shares) | 13,800,000 | |||||||
Proceeds from DRIP Plan | 154 | 154 | 154 | |||||
Proceeds from DRIP Plan (in shares) | 6,404 | |||||||
Equity offering costs | (892) | (892) | (892) | |||||
Common stock repurchased | (8,829) | $ (8,829) | (8,829) | |||||
Common stock repurchased (in shares) | 400,000 | |||||||
Equity component of 4.0% Convertible Senior Notes repurchase | (17,727) | (17,727) | (17,727) | |||||
Share-based compensation | 17,882 | $ 11 | 17,871 | 17,882 | ||||
Share-based compensation (in shares) | 1,112,157 | |||||||
Manager incentive fee paid in stock | 12,739 | $ 5 | 12,734 | 12,739 | ||||
Manager incentive fee paid in stock (in shares) | 523,560 | |||||||
Net income | 237,511 | 237,511 | 908 | 238,419 | ||||
Dividends declared, $0.96 per share | (224,010) | (224,010) | (224,010) | |||||
Other comprehensive loss, net | (9,995) | (9,995) | (9,995) | |||||
VIE non-controlling interests | 1,045 | 1,045 | ||||||
Contributions from non-controlling interests | 2,077 | 2,077 | ||||||
Distribution to non-controlling interests | (792) | (792) | ||||||
Balance at Jun. 30, 2015 | 4,193,831 | $ 2,402 | 4,173,869 | $ (32,464) | 4,123 | 45,901 | 25,294 | 4,219,125 |
Balance (in shares) at Jun. 30, 2015 | 240,194,174 | 1,613,750 | ||||||
Balance at Dec. 31, 2015 | 4,140,316 | $ 2,410 | 4,192,844 | $ (72,381) | (12,286) | 29,729 | 30,627 | $ 4,170,943 |
Balance (in shares) at Dec. 31, 2015 | 241,044,775 | 3,553,996 | 241,044,775 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from ATM Agreement (in shares) | 0 | |||||||
Proceeds from DRIP Plan | 177 | 177 | $ 177 | |||||
Proceeds from DRIP Plan (in shares) | 9,163 | |||||||
Common stock repurchased | (19,723) | $ (19,723) | $ (19,723) | |||||
Common stock repurchased (in shares) | 1,052,889 | 1,052,889 | ||||||
Share-based compensation | 14,660 | $ 9 | 14,651 | $ 14,660 | ||||
Share-based compensation (in shares) | 876,674 | |||||||
Manager incentive fee paid in stock | 13,223 | $ 8 | 13,215 | 13,223 | ||||
Manager incentive fee paid in stock (in shares) | 723,249 | |||||||
Net income | 138,130 | 138,130 | 987 | 139,117 | ||||
Dividends declared, $0.96 per share | (229,217) | (229,217) | (229,217) | |||||
Other comprehensive loss, net | 2,898 | 2,898 | 2,898 | |||||
VIE non-controlling interests | (52) | (52) | ||||||
Contributions from non-controlling interests | 10,417 | 10,417 | ||||||
Distribution to non-controlling interests | (2,350) | (2,350) | ||||||
Balance at Jun. 30, 2016 | $ 4,060,464 | $ 2,427 | $ 4,220,887 | $ (92,104) | $ (103,373) | $ 32,627 | $ 39,629 | $ 4,100,093 |
Balance (in shares) at Jun. 30, 2016 | 242,653,861 | 4,606,885 | 242,653,861 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | May 09, 2016 | Feb. 25, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jul. 03, 2013 |
Dividends declared per common share (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 | |
2019 Notes | |||||||
Interest rate (as a percent) | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows from Operating Activities: | ||
Net income | $ 139,117 | $ 238,419 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs, premiums and discounts on secured financing agreements | 8,212 | 7,159 |
Amortization of convertible debt discount and deferred costs | 10,628 | 10,503 |
Accretion of net discount on investment securities | (7,349) | (16,314) |
Accretion of net deferred loan fees and discounts | (23,362) | (18,139) |
Amortization of net discount from secured borrowings on transferred loans | 4 | |
Share-based compensation | 14,660 | 17,882 |
Share-based component of incentive fees | 13,223 | 12,739 |
Change in fair value of fair value option investment securities | (2,072) | (947) |
Change in fair value of consolidated VIEs | 45,899 | 3,663 |
Change in fair value of servicing rights | 18,930 | 4,194 |
Change in fair value of loans held-for-sale | (20,126) | (31,962) |
Change in fair value of derivatives | 2,332 | (8,782) |
Foreign currency loss, net | 17,169 | 9,659 |
Gain on sale of investments and other assets | (155) | (17,407) |
Loan loss allowance, net | 1,268 | 2,978 |
Depreciation and amortization | 34,664 | 9,079 |
Earnings from unconsolidated entities | (8,544) | (15,041) |
Distributions of earnings from unconsolidated entities | 9,817 | 14,752 |
Bargain purchase gain | (8,406) | |
Loss on extinguishment of debt | 5,921 | |
Originations of loans held-for-sale, net of principal collections | (488,448) | (889,413) |
Proceeds from sale of loans held-for-sale | 475,333 | 1,033,644 |
Changes in operating assets and liabilities: | ||
Related-party payable, net | (20,749) | (16,192) |
Accrued and capitalized interest receivable, less purchased interest | (41,151) | (32,185) |
Other assets | 6,715 | (11,452) |
Accounts payable, accrued expenses and other liabilities | (29,055) | (17,810) |
Net cash provided by operating activities | 148,550 | 294,952 |
Cash Flows from Investing Activities: | ||
Origination and purchase of loans held-for-investment | (997,421) | (1,256,784) |
Proceeds from principal collections on loans | 1,193,643 | 698,901 |
Proceeds from loans sold | 121,276 | 378,576 |
Purchase of investment securities | (350,642) | (147,423) |
Proceeds from sales of investment securities | 1,269 | 5,098 |
Proceeds from principal collections on investment securities | 47,544 | 247,774 |
Real estate business combinations, net of cash acquired | (91,186) | (95,891) |
Proceeds from sale of properties | 33,056 | |
Purchase of other assets | (5,521) | |
Investment in unconsolidated entities | (3,854) | (32,065) |
Distribution of capital from unconsolidated entities | 1,244 | 22,127 |
Payments for purchase or termination of derivatives | (15,144) | (13,894) |
Proceeds from termination of derivatives | 27,447 | 24,782 |
Return of investment basis in purchased derivative asset | 137 | 177 |
(Increase) decrease in restricted cash, net | (17,840) | 16,090 |
Net cash used in investing activities | (89,048) | (119,476) |
Cash Flows from Financing Activities: | ||
Borrowings under financing agreements | 2,059,599 | 2,464,018 |
Principal repayments on and repurchases of borrowings | (1,711,117) | (2,445,916) |
Payment of deferred financing costs | (6,437) | (7,054) |
Proceeds from common stock issuances | 177 | 326,296 |
Payment of equity offering costs | (892) | |
Payment of dividends | (229,151) | (216,623) |
Contributions from non-controlling interests | 10,417 | |
Distributions to non-controlling interests | (2,350) | (792) |
Purchase of treasury stock | (19,723) | (2,268) |
Issuance of debt of consolidated VIEs | 596 | 7,513 |
Repayment of debt of consolidated VIEs | (147,523) | (120,529) |
Distributions of cash from consolidated VIEs | 22,986 | 14,584 |
Net cash provided by financing activities | (22,526) | 18,337 |
Net (decrease) increase in cash and cash equivalents | 36,976 | 193,813 |
Cash and cash equivalents, beginning of period | 368,815 | 255,187 |
Effect of exchange rate changes on cash | (971) | (2,522) |
Cash and cash equivalents, end of period | 404,820 | 446,478 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 91,961 | 81,208 |
Income taxes paid | 2,177 | 17,663 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Fair value of assets acquired, net of cash | 270,021 | 393,774 |
Fair value of liabilities assumed | 170,429 | 297,883 |
Net assets acquired from consolidated VIEs | 102,976 | 31,309 |
Unsettled common stock repurchased | 6,561 | |
Dividends declared, but not yet paid | 115,013 | 115,575 |
Consolidation of VIEs (VIE asset/liability additions) | 16,850,221 | 5,657,627 |
Deconsolidation of VIEs (VIE asset/liability reductions) | $ 5,126,980 | $ 3,481,363 |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2016 | |
Business and Organization | |
Business and Organization | 1. Business and Organizatio n Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering (“IPO”). We are focused primarily on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities (“CMBS”), and other commercial real estate investments in both the U.S. and Europe. We refer to the following as our target assets: commercial real estate mortgage loans, preferred equity interests, CMBS and other commercial real estate -related debt investments. Our target assets may also include residential mortgage-backed securities (“RMBS”), certain residential mortgage loans, distressed or non-performing commercial loans, commercial properties subject to net leases and equity interests in commercial real estate . As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions. We have three reportable business segments as of June 30, 2016: · Real estate lending (the “Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, CMBS, RMBS and other real estate and real estate-related debt investments in both the U.S. and Europe that are held for investment. · Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) servicing businesses in both the U.S. and Europe that manage and work out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions, and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts. This segment excludes the consolidation of securitization variable interest entities (“VIEs”). · Real estate property (the “Property Segment”) —engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multi-family properties, that are held for investment. We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements. We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our “Manager”) pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded and controlled by Mr. Sternlicht. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Balance Sheet Presentation of the Investing and Servicing Segment’s Variable Interest Entities As noted above, the Investing and Servicing Segment operates an investment business that acquires unrated, investment grade and non-investment grade rated CMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. Because the Investing and Servicing Segment often serves as the special servicer of the trusts in which it invests, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs. 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, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation. Refer to the segment data in Note 22 for a presentation of the Investing and Servicing Segment without consolidation of these VIEs. Basis of Accounting and Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the operating results for the full year. 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, or (iii) became significant since December 31, 2015 due to a corporate action or increase in the significance of the underlying business activity. Variable Interest Entities 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 consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE. To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. Effective January 1, 2016, we implemented Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis , which specifies that the right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE. In connection with the implementation of this ASU, we consolidated VIE assets and VIE liabilities from CMBS trusts as of March 31, 2016 where the right to remove the Company as special servicer was not exercisable without cause. Our implementation of the ASU also resulted in the determination that certain entities in which we hold interests, which prior to the implementation of the ASU were not considered VIEs, are now considered VIEs as the limited partners of these entities do not collectively possess (i) the right to remove the general partner without cause or (ii) the right to participate in significant decisions made by the partnership. The application of the ASU to these particular entities did not change our respective conclusions as to whether or not they should be consolidated. We applied the provisions of this ASU using a modified retrospective approach which does not require the restatement of prior period financial statements. There was no cumulative-effect adjustment to equity upon adoption. Refer to Note 14 for further discussion of the impact of our implementation of ASU 2015-02. To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us. Our purchased investment securities include CMBS which are unrated and non-investment grade rated securities issued by CMBS trusts. In certain cases, we may contract to provide special servicing activities for these CMBS trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation. For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation. We perform ongoing reassessments of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change. We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our condensed consolidated statements of operations. The residual difference shown on our condensed consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs. 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 CMBS 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.” Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a CMBS trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP. In addition to sharing a similar measurement method as the loans in a CMBS trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a CMBS trust. REO assets generally represent a very small percentage of the overall asset pool of a CMBS trust. In a new issue CMBS trust there are no REO assets. We estimate that REO assets constitute approximately 4% of our consolidated securitization VIE assets, with the remaining 96% representing loans . However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity . In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually. Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities. For these reasons, the assets of our securitization VIEs are presented in the aggregate. Fair Value Option The guidance in ASC 825, Financial Instruments , provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method. We have elected the fair value option for eligible financial assets and liabilities of our consolidated securitization VIEs, loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for mortgage loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform were made due to the short-term nature of these instruments. The fair value elections for investments in marketable equity securities were made because the shares are listed on an exchange, which allows us to determine the fair value using a quoted price from an active market. Fair Value Measurements We measure our mortgage ‑backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. 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, no 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 VIE, we maximize the use of observable inputs over unobservable inputs. We also acknowledge that our principal market for selling CMBS assets is the securitization market where the market participant is considered to be a CMBS trust or a collateralized debt obligation (“CDO”). This methodology results in the fair value of the assets of a static CMBS trust being equal to the fair value of its liabilities. Refer to Note 19 for further discussion regarding our fair value measurements. Loans Held-for-Investment and Provision for Loan Losses Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees, and origination costs as applicable, unless the loans are deemed impaired. We evaluate each loan classified as held-for-investment for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Actual losses, if any, could ultimately differ from these estimates. We perform a quarterly review of our portfolio of loans. In connection with this review, we assess the performance of each loan and assign a risk rating based on several factors, including risk of loss, loan-to-collateral value ratio (“LTV”), collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” through “5”, from less risk to greater risk, in connection with this review. Deferred Financing Costs In accordance with ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) , effective January 1, 2016 we modified our presentation of deferred financing costs in our condensed consolidated balance sheets to present such costs as a direct deduction from the carrying value of the related debt liability, consistent with debt discounts, rather than as a separate deferred asset as the previous guidance required. Deferred financing costs will continue to be amortized to interest expense over the terms of the respective debt agreements. As required by this ASU, we applied this change retrospectively to our prior period condensed consolidated balance sheet presentation. Earnings Per Share We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested restricted stock (“RSAs”) and restricted stock units (“RSUs”), (ii) shares contingently issuable to our Manager, and (iii) the “in-the-money” conversion options associated with our outstanding convertible senior notes (see further discussion in Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the three and six months ended June 30, 2016 and 2015, the two-class method resulted in the most dilutive EPS calculation. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any), and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows. Reclassifications In connection with our implementation of ASU 2015-03 discussed above, we reclassified deferred financing costs of $38.3 million and $1.4 million previously reported in other assets to secured financing agreements, net and convertible senior notes, net, respectively, within our condensed consolidated balance sheet as of December 31, 2015. Recent Accounting Developments On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers , which establishes key principles by which an entity determines the amount and timing of revenue recognized from customer contracts. At issuance, the ASU was effective for the first interim or annual period beginning after December 15, 2016. On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which delayed the effective date of ASU 2014-09 by one year, resulting in the ASU becoming effective for the first interim or annual period beginning after December 15, 2017. Early application, which was not permissible under the initial effectiveness timeline, is now permissible though no earlier than as of the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities , which impacts the accounting for equity investments, financial liabilities under the fair value option, and disclosure requirements for financial instruments. The ASU shall be applied prospectively and is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early application is not permitted. We are in the process of assessing the impact this ASU will have on the Company. On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly changed. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018 by applying a modified retrospective approach. Early application is permitted. We are in the process of assessing the impact this ASU will have on the Company. On March 14, 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815) – Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that the change in counterparty to a derivative designated in a hedging relationship, in and of itself, would not require that the hedging relationship be de-designated for hedge accounting purposes. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On March 15, 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323) – Simplifying the Transition to the Equity Method of Accounting, which amends existing guidance to require that in instances where an investee is transitioning from the cost method of accounting to the equity method of accounting due to an increase in ownership level or degree of influence, the investee applies the equity method of accounting prospectively from the date significant influence is obtained, whereas existing guidance requires an investee to retrospectively apply the equity method of accounting for all previous periods in which the investment was held. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On March 17, 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which amends the principal-versus-agent implementation guidance and illustrations in the FASB’s revenue recognition standard issued in ASU 2014-09. The ASU provides further guidance to assist an entity in the determination of whether the nature of its promise to its customer is to provide the underlying goods or services, meaning the entity is a principal, or to arrange for a third party to provide the underlying goods or services, meaning the entity is an agent. The ASU is effective for the first interim or annual period beginning after December 15, 2017. Early application is permissible though no earlier than the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On March 30, 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting , which seeks to simplify the accounting for employee share-based payment transactions, including the accounting for associated income taxes and forfeitures. The ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted in any interim or annual period. We do not expect the application of this ASU to materially impact the Company. On April 14, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing , which amends guidance and illustrations in the FASB’s revenue recognition standard issued in ASU 2014-09 regarding the identification of performance obligations and the implementation guidance on licensing arrangements. The ASU is effective for the first interim or annual period beginning after December 15, 2017. Early application is permissible though no earlier than the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that existing GAAP currently mandates. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument compared to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. The ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. Early application is permissible though no earlier than the first interim or annual period beginning after December 15, 2018. We are in the process of assessing the impact this ASU will have on the Company. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2016 | |
Acquisitions | |
Acquisitions | 3. Acquisitions Woodstar Portfolio Acquisition During the three months ended June 30, 2016, we acquired the final two of the 32 affordable housing communities which comprise our “Woodstar Portfolio.” During the three months ended March 31, 2016, we acquired 12 of the Woodstar Portfol io’s affordable housing communities. The Woodstar Portfolio in its entirety is comprised of 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas and is 98% occupied. The two affordable housing communities acquired during the three months ended June 30, 2016 are comprised of 628 units with total assets of $48.9 million and assumed liabilities of $22.1 million, which includes state sponsored financing and other assumed debt. The 14 affordable housing communities acquired during the six months ended June 30, 2016 are comprised of 3,710 units with total assets of $ 276.3 million and assumed liabilities of $170.4 million, which includes federal, state and county sponsored financing and other assumed debt. Refer to Note 9 for further discussion of these assumed debt facilities. For the 14 affordable housing communities acquired during 2016, we recognized revenues of $14.6 million and net income of $5.0 million during the six months ended June 30, 2016. Such net income includes (i) bargain purchase gains of $8.4 million, (ii) depreciation and amortization expense of $9.0 million and (iii) one-time acquisition-related costs, such as legal and due diligence costs, of approximately $0.8 million. No goodwill was recognized in connection with the Woodstar Portfolio acquisition as the purchase price did not exceed the fair value of the net assets acquired. During the three months ended June 30, 2016, a bargain purchase gain of $8.4 million was recognized within other income, net in our condensed consolidated statements of operations as the fair value of the net assets acquired during the three months ended June 30, 2016 exceeded the purchase price due to favorable changes in net asset fair values occurring between the date the purchase price was negotiated and the closing date. Investing and Servicing Segment Property Portfolio During the three and six months ended June 30, 2016, our Investing and Servicing Segment acquired controlling interests in commercial real estate properties as well as a non-performing loan from CMBS trusts for $58.0 million and $87.8 million, respectively. In addition, during the three months ended June 30, 2016, we foreclosed on a non-performing loan that was previously acquired from a CMBS trust for $8.2 million. These properties, aggregated with the controlling interests in 14 U.S. commercial real estate properties acquired from CMBS trusts during the year ended December 31, 2015 for $138.7 million, comprise the Investing and Servicing Segment Property Portfolio (the “REO Portfolio”). When the properties are acquired from CMBS trusts that are consolidated as VIEs on our balance sheet, the acquisitions are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows. No goodwill or bargain purchase gain was recognized in connection with the REO Portfolio acquisitions as the purchase price equaled the fair value of the net assets acquired. Ireland Portfolio Acquisition During 2015, we acquired 12 net leased fully occupied office properties and one multi-family property all located in Dublin, Ireland. Collectively, these 13 properties comprise our “Ireland Portfolio”. The Ireland Portfolio, which collectively is comprised of approximately 600,000 square feet, included total assets of $518.2 million and assumed debt of $283.0 million at acquisition. Following our acquisition, all assumed debt was immediately extinguished and replaced with new financing of $328.6 million from the Ireland Portfolio Mortgage (as set forth in Note 9). All properties within the Ireland Portfolio were acquired from entities controlled by the same third party investment fund. No goodwill or bargain purchase gain was recognized in connection with the Ireland Portfolio acquisition as the purchase price equaled the fair value of the net assets acquired. Purchase Price Allocations of Acquisitions We applied the provisions of ASC 805, Business Combinations , in accounting for our acquisitions of the Woodstar Portfolio, the REO Portfolio and the Ireland Portfolio. In doing so, we have recorded all identifiable assets acquired and liabilities assumed at fair value as of the respective acquisition dates. These amounts for the Woodstar Portfolio and certain properties within the REO Portfolio are provisional and may be adjusted during the measurement period, which expires no later than one year from the acquisition dates, if new information is obtained that, if known, would have affected the amounts recognized as of the acquisition dates. The following table summarizes the identified assets acquired and liabilities assumed at the respective acquisition dates (amounts in thousands): 2016 2015 Woodstar REO Woodstar REO Ireland Assets acquired: Portfolio Portfolio Portfolio Portfolio Portfolio Cash and cash equivalents $ $ — $ — $ — $ — Restricted cash — — — — Properties Intangible assets Other assets Total assets acquired Liabilities assumed: Accounts payable, accrued expenses and other liabilities Secured financing agreements — — Total liabilities assumed Non-controlling interests — — — Net assets acquired $ $ $ $ $ Pro-Forma Operating Data The pro-forma revenues and net income attributable to the Company for the three and six months ended June 30, 2016 and 2015, assuming all the properties acquired within the Woodstar Portfolio, REO Portfolio and the Ireland Portfolio were acquired on January 1, 2014 for the 2015 acquisitions and January 1, 2015 for the 2016 acquisitions, are as follows (amounts in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenues $ $ $ $ Net income attributable to STWD Net income per share - Basic Net income per share - Diluted Pro-forma net income was adjusted to include the following estimated incremental management fees the combined entity would have incurred (amounts in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Management fee expense addition $ $ $ $ |
Loans
Loans | 6 Months Ended |
Jun. 30, 2016 | |
Loans | |
Loans | 4. Loans Our loans held-for-investment are accounted for at amortized cost and our loans held-for-sale are accounted for at the lower of cost or fair value, unless we have elected the fair value option. The following tables summarize our investments in mortgages and loans by subordination class as of June 30, 2016 and December 31, 2015 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) June 30, 2016 Value Amount Coupon (years)(3) First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale, fair value option elected % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ December 31, 2015 First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale, fair value option elected % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ (1) 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 $949.2 million and $930.0 million being classified as first mortgages as of June 30, 2016 and December 31, 2015, respectively. (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. (3) 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. As of June 30, 2016, approximately $5.1 billion, or 89.1% , of our loans held-for-investment were variable rate and paid interest principally at LIBOR plus a weighted-average spread of 5.9% . The following table summarizes our investments in floating rate loans (dollars in thousands): June 30, 2016 December 31, 2015 Carrying Carrying Index Base Rate Value Base Rate Value One-month LIBOR USD % $ % $ Three-month LIBOR GBP N/A — % LIBOR floor 0.15 - 3.00 % (1) 0.15 - 3.00 % (1) Total $ $ (1) The weighted-average LIBOR floor was 0.32% and 0.31% as of June 30, 2016 and December 31, 2015, respectively. Our loans are typically collateralized by real estate. As a result, we regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. We also evaluate the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, we consider the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and discussions with market participants. Our evaluation process as described above produces an internal risk rating between 1 and 5, which is a weighted average of the numerical ratings in the following categories: (i) sponsor capability and financial condition, (ii) loan and collateral performance relative to underwriting, (iii) quality and stability of collateral cash flows, and (iv) loan structure. We utilize the overall risk ratings as a concise means to monitor any credit migration on a loan as well as on the whole portfolio. While the overall risk rating is generally not the sole factor we use in determining whether a loan is impaired, a loan with a higher overall risk rating would tend to have more adverse indicators of impairment, and therefore would be more likely to experience a credit loss. The rating categories generally include the characteristics described below, but these are utilized as guidelines and therefore not every loan will have all of the characteristics described in each category : Rating Characteristics 1 Sponsor capability and financial condition—Sponsor is highly rated or investment grade or, if private, the equivalent thereof with significant management experience. Loan collateral and performance relative to underwriting—The collateral has surpassed underwritten expectations. Quality and stability of collateral cash flows—Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix. Loan structure—LTV does not exceed 65% . The loan has structural features that enhance the credit profile. 2 Sponsor capability and financial condition—Strong sponsorship with experienced management team and a responsibly leveraged portfolio. Loan collateral and performance relative to underwriting—Collateral performance equals or exceeds underwritten expectations and covenants and performance criteria are being met or exceeded. Quality and stability of collateral cash flows—Occupancy is stabilized with a diverse tenant mix. Loan structure—LTV does not exceed 70% and unique property risks are mitigated by structural features. 3 Sponsor capability and financial condition—Sponsor has historically met its credit obligations, routinely pays off loans at maturity, and has a capable management team. Loan collateral and performance relative to underwriting—Property performance is consistent with underwritten expectations. Quality and stability of collateral cash flows—Occupancy is stabilized, near stabilized, or is on track with underwriting. Loan structure—LTV does not exceed 80% . 4 Sponsor capability and financial condition—Sponsor credit history includes missed payments, past due payment, and maturity extensions. Management team is capable but thin. Loan collateral and performance relative to underwriting—Property performance lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. A sale of the property may be necessary in order for the borrower to pay off the loan at maturity. Quality and stability of collateral cash flows—Occupancy is not stabilized and the property has a large amount of rollover. Loan structure—LTV is 80% to 90% . 5 Sponsor capability and financial condition—Credit history includes defaults, deeds ‑in ‑lieu, foreclosures, and/or bankruptcies. Loan collateral and performance relative to underwriting—Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Sale proceeds would not be sufficient to pay off the loan at maturity. Quality and stability of collateral cash flows—The property has material vacancy and significant rollover of remaining tenants. Loan structure—LTV exceeds 90% . As of June 30, 2016, the risk ratings for loans subject to our rating system, which excludes loans on the cost recovery method and loans for which the fair value option has been elected, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ % 2 — — % 3 — % 4 — — % 5 — — — — % N/A — — — — % $ $ $ $ $ $ % As of December 31, 2015, the risk ratings for loans subject to our rating system by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ — % 2 — — % 3 — % 4 — — % 5 — — — — — — — % N/A — — — — % $ $ $ $ $ $ % After completing our impairment evaluation process, we concluded that no impairment charges were required on any individual loans held-for-investment as of June 30, 2016 or December 31, 2015, as we expect to collect all outstanding principal and interest. None of our loans were 90 days or greater past due as of June 30, 2016. In accordance with our policies, we record an allowance for loan losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4,” plus (ii) 5% of the aggregate carrying amount of loans rated as a “5.” The following table presents the activity in our allowance for loan losses (amounts in thousands): For the Six Months Ended June 30, 2016 2015 Allowance for loan losses at January 1 $ $ Provision for loan losses Charge-offs — — Recoveries — — Allowance for loan losses at June 30 $ $ Recorded investment in loans related to the allowance for loan loss $ $ The activity in our loan portfolio was as follows (amounts in thousands): For the Six Months Ended June 30, 2016 2015 Balance at January 1 $ $ Acquisitions/originations/additional funding Capitalized interest (1) Basis of loans sold (2) Loan maturities/principal repayments Discount accretion/premium amortization Changes in fair value Unrealized foreign currency remeasurement loss Change in loan loss allowance, net Transfer to/from other asset classifications Balance at June 30 $ $ (1) Represents accrued interest income on loans whose terms do not require current payment of interest. (2) See Note 11 for additional disclosure on these transactions. |
Investment Securities
Investment Securities | 6 Months Ended |
Jun. 30, 2016 | |
Investment Securities | |
Investment Securities | 5. Investment Securities Investment securities were comprised of the following as of June 30, 2016 and December 31, 2015 (amounts in thousands): Carrying Value as of June 30, 2016 December 31, 2015 RMBS, available-for-sale $ $ CMBS, fair value option (1) Held-to-maturity (“HTM”) securities Equity security, fair value option Subtotal — Investment securities VIE eliminations (1) Total investment securities $ $ (1) Certain fair value option CMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810. Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands): Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Three Months Ended June 30, 2016 Purchases $ $ — $ $ $ — $ Sales — — — — Principal collections — — Three Months Ended June 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — — — Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Six Months Ended June 30, 2016 Purchases $ $ — $ $ $ — $ Sales — — — — Principal collections — — Six Months Ended June 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — RMBS, Available-for-Sale The Company classified all of its RMBS as available-for-sale as of June 30, 2016 and December 31, 2015. These RMBS are reported at fair value in the balance sheet with changes in fair value recorded in accumulated other comprehensive income (“AOCI”). The tables below summarize various attributes of our investments in available-for-sale RMBS as of June 30, 2016 and December 31, 2015 (dollars in thousands): Unrealized Gains or (Losses) Recognized in AOCI Purchase Recorded Gross Gross Net Amortized Credit Amortized Non-Credit Unrealized Unrealized Fair Value Cost OTTI Cost OTTI Gains Losses Adjustment Fair Value June 30, 2016 RMBS $ $ $ $ $ $ $ $ December 31, 2015 RMBS $ $ $ $ $ $ — $ $ Weighted Average Coupon (1) Weighted Average Rating WAL (Years) (2) June 30, 2016 RMBS % CCC December 31, 2015 RMBS % B− (1) Calculated using the June 30, 2016 and December 31, 2015 one-month LIBOR rate of 0.465% and 0.430% , respectively, for floating rate securities. (2) Represents the WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments. As of June 30, 2016, approximately $205.0 million, or 81.6% , of our RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.25% . As of December 31, 2015, approximately $122.7 million, or 69.7% , of our RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 0.43% . We purchased all of the RMBS at a discount that will be 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 these discounts. The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of June 30, 2016 and December 31, 2015 (amounts in thousands): June 30, 2016 December 31, 2015 Principal balance $ $ Accretable yield Non-accretable difference Total discount Amortized cost $ $ The principal balance of credit deteriorated RMBS was $377.0 million and $199.0 million as of June 30, 2016 and December 31, 2015, respectively. Accretable yield related to these securities totaled $68.4 million and $57.7 million as of June 30, 2016 and December 31, 2015, respectively. The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the three and six months ended June 30, 2016 (amounts in thousands): Non-Accretable Three Months Ended June 30, 2016 Accretable Yield Difference Balance as of April 1, 2016 $ $ Accretion of discount — Principal recoveries, net — Purchases Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of June 30, 2016 $ $ Six Months Ended June 30, 2016 Balance as of January 1, 2016 $ $ Accretion of discount — Principal recoveries, net — Purchases Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of June 30, 2016 $ $ We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $0.3 million and $0.4 million for the three months ended June 30, 2016 and 2015, respectively, and $0.7 million for both the six months ended June 30, 2016 and 2015, which has been recorded as management fees in the accompanying condensed consolidated statements of operations. The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of June 30, 2016 and December 31, 2015, and for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands): 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 June 30, 2016 RMBS $ $ $ $ As of December 31, 2015 RMBS $ $ $ $ As of June 30, 2016 and December 31, 2015, there were four securities and five securities, respectively, with unrealized losses reflected in the table above. After evaluating these securities and recording adjustments for credit-related OTTI, we concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the securities’ estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the securities, it was not considered more likely than not that we would be forced to sell the securities prior to recovering our amortized cost, and there were no material credit events that would have caused us to otherwise conclude that we would not recover our cost. Credit losses, which represent most of the OTTI we record on securities, are calculated by comparing (i) the estimated future cash flows of each security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) our amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or impairments could be materially different from what is currently projected and/or reported. CMBS, Fair Value Option As discussed in the “Fair Value Option” section of Note 2 herein, we elect the fair value option for the Investing and Servicing Segment’s CMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of June 30, 2016, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, before consolidation of securitization VIEs, were $1.1 billion and $4.7 billion, respectively. The $1.1 billion fair value balance represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value ($936.6 million at June 30, 2016) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option CMBS. During the three and six months ended June 30, 2016, we purchased $54.8 million and $101.3 million of CMBS, respectively, for which we elected the fair value option. Due to our consolidation of securitization VIEs, $30.3 million and $43.7 million, respectively, of this amount is eliminated and reflected primarily as repayment of debt of consolidated VIEs in our condensed consolidated statement of cash flows. As of June 30, 2016, none of our CMBS where we have elected the fair value option were variable rate. The table below summarizes various attributes of our investment in fair value option CMBS as of June 30, 2016 and December 31, 2015: Weighted Average Coupon Weighted Average Rating (1) WAL (Years) (2) June 30, 2016 CMBS, fair value option % B− December 31, 2015 CMBS, fair value option % CCC+ (1) As of June 30, 2016 and December 31, 2015, excludes $6.2 million and $51.3 million, respectively, in fair value option CMBS that are not rated. (2) The WAL of each security is calculated based on the period of time over which we expect to receive principal cash flows. Expected principal cash flows are based on contractual payments net of expected losses. HTM Securities The table below summarizes unrealized gains and losses of our investments in HTM securities as of June 30, 2016 and December 31, 2015 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value June 30, 2016 CMBS $ $ — $ $ Preferred interests — Total $ $ — $ $ December 31, 2015 CMBS $ $ $ $ Preferred interests — Total $ $ $ $ The table below summarizes the maturities of our HTM CMBS and our HTM preferred equity interests in limited liability companies that own commercial real estate as of June 30, 2016 (amounts in thousands): Preferred CMBS Interests Total Less than one year $ $ — $ One to three years — Three to five years — Thereafter — Total $ $ $ Equity Security, Fair Value Option During 2012, we acquired 9,140,000 ordinary shares from a related-party in Starwood European Real Estate Finance Limited (“SEREF”), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. We have elected to report the investment using the fair value option because the shares are listed on an exchange, which allows us to determine the fair value using a quoted price from an active market, and also due to potential lags in reporting resulting from differences in the respective regulatory requirements. The fair value of the investment remeasured in USD was $12.9 m illion and $14.5 million as of June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016, our shares represent an approximate 3% interest in SEREF. |
Properties
Properties | 6 Months Ended |
Jun. 30, 2016 | |
Properties | |
Properties | 6 . Propertie s Our properties include the Woodstar Portfolio, the REO Portfolio and the Ireland Portfolio as discussed in Note 3. The table below summarizes our properties held as of June 30, 2016 and December 31, 2015 (dollars in thousands): Depreciable Life June 30, 2016 December 31, 2015 Property Segment Land and land improvements 0 – 10 years $ $ Buildings and building improvements 10 – 40 years Furniture & fixtures 2 – 7 years Investing and Servicing Segment Land and land improvements 0 – 10 years Buildings and building improvements 10 – 40 years Furniture & fixtures 3 – 7 years Properties, cost Less: accumulated depreciation Properties, net $ $ In March 2015, the Investing and Servicing Segment sold an operating property that we had previously acquired from a CMBS trust, which resulted in a $17.1 million gain on sale of investments and other assets in our condensed consolidated statement of operations for the six months ended June 30, 2015. There were no properties sold during the six months ended June 30, 2016. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 6 Months Ended |
Jun. 30, 2016 | |
Investment in Unconsolidated Entities | |
Investment in Unconsolidated Entities | 7. Investment in Unconsolidated Entities The table below summarizes our investments in unconsolidated entities as of June 30, 2016 and December 31, 2015 (dollars in thousands ): Participation / Carrying value as of Ownership % (1) June 30, 2016 December 31, 2015 Equity method: Retail Fund 33% $ $ Investor entity which owns equity in an online real estate auction company 50% Equity interests in commercial real estate (2) 16% - 50% Various 25% - 50% Cost method: Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% Various 0% - 3% $ $ (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) During the three months ended June 30, 2016, a partnership in which we hold a 50% interest acquired a real estate asset from a CMBS trust for $19.0 million. As of June 30, 2016, our investment in the partnership was $3.7 million. There were no differences between the carrying value of our equity method investments and the underlying equity in the net assets of the investees as of June 30, 2016. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 8. Goodwil l and Intangible Assets Goodwill Goodwill at June 30, 2016 and December 31, 2015 represents the excess of consideration transferred over the fair value of net assets of LNR Property LLC (“LNR”) acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes an international network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets. Intangible Assets Servicing Rights Intangibles In connection with the LNR acquisition, we identified domestic and European servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. All of our servicing fees are specified by these Pooling and Servicing Agreements. At June 30, 2016 and December 31, 2015, the balance of the domestic servicing intangible was net of $29.6 million and $11.8 million, respectively, that was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of June 30, 2016 and December 31, 2015, the domestic servicing intangible had a balance of $112.9 million and $131.5 million, respectively, which represents our economic interest in this asset. Lease Intangibles In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain noncancelable operating leases of the acquired properties. The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of June 30, 2016 and December 31, 2015 (amounts in thousands): As of June 30, 2016 As of December 31, 2015 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ $ — $ $ $ — $ European servicing rights (1) In-place lease intangible assets Favorable lease intangible assets Total net intangible assets $ $ $ $ $ $ (1) The fair value as of June 30, 2016 and December 31, 2015 was $4.4 million and $5.3 million, respectively. The following table summarizes the activity within intangible assets for the six months ended June 30, 2016 (amounts in thousands): Domestic European In-place Lease Favorable Lease Servicing Servicing Intangible Intangible Rights Rights Assets Assets Total Balance as of January 1, 2016 $ $ $ $ $ Impact of ASU 2015-02 Adoption (1) — — — Acquisition of additional Woodstar Portfolio properties — — — Acquisition of additional REO Portfolio properties — — Amortization — Foreign exchange (loss) gain — Changes in fair value due to changes in inputs and assumptions — — — Balance as of June 30, 2016 $ $ $ $ $ (1) As discussed in Notes 2 and 14, our implementation of ASU 2015-02 resulted in the consolidation of certain CMBS trusts effective January 1, 2016, which required the elimination of $17.5 million of domestic servicing rights associated with these newly consolidated trusts. The following table sets forth the estimated aggregate amortization of our European servicing rights, in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands ): 2016 (remainder of) $ 2017 2018 2019 2020 Thereafter Total $ |
Secured Financing Agreements
Secured Financing Agreements | 6 Months Ended |
Jun. 30, 2016 | |
Secured financing agreements | |
Secured Financing Agreements | |
Secured Financing Agreements | 9. Secured Financing Agreements The following table is a summary of our secured financing agreements in place as of June 30, 2016 and December 31, 2015 (dollars in thousands): Carrying value at Current Extended Pledged Asset Maximum June 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2016 2015 Lender 1 Repo 1 (b) (b) LIBOR + 1.85% to 5.25% $ $ $ $ Lender 2 Repo 1 Oct 2017 Oct 2020 LIBOR + 1.75% to 2.75% Lender 3 Repo 1 May 2017 May 2019 LIBOR + 2.50% to 2.85% Lender 4 Repo 1 Oct 2016 Oct 2017 LIBOR + 2.00% — — — Lender 4 Repo 2 Dec 2018 Dec 2020 LIBOR + 2.00% to 2.50% (c) — Lender 6 Repo 1 Aug 2018 N/A LIBOR + 2.50% to 3.00% Lender 7 Secured Financing Jul 2018 Jul 2019 LIBOR + 2.75% (d) (e) — Conduit Repo 1 N/A N/A N/A — — — Conduit Repo 2 Nov 2016 N/A LIBOR + 2.10% — Conduit Repo 3 Feb 2018 Feb 2019 LIBOR + 2.10% Conduit Repo 4 Oct 2017 Oct 2020 LIBOR + 2.25% — CMBS Repo 1 (f) (f) LIBOR + 1.90% — CMBS Repo 2 Jun 2020 N/A LIBOR/EURIBOR + 2.00% to 2.70% CMBS Repo 3 (g) (g) LIBOR + 1.40% to 1.85% RMBS Repo 1 (h) N/A LIBOR + 1.90% Investing and Servicing Segment Property Mortgages Jun 2018 to Jun 2026 N/A Various Ireland Portfolio Mortgage May 2020 N/A EURIBOR + 1.69% Woodstar Portfolio Mortgages Jul 2017 to Jan 2026 N/A 3.72% to 7.46% (i) Woodstar Portfolio Government Financing Jun 2017 to Jun 2049 N/A 1.00% to 5.00% Term Loan Apr 2020 N/A LIBOR + 2.75% (d) FHLB Advances Nov 2016 N/A LIBOR + 0.37% $ $ Unamortized premium (discount), net Unamortized deferred financing costs $ $ (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans is January 2017 before extension options and January 2019 assuming exercise of initial extension options. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions and not to exceed January 2023. (c) The initial maximum facility size of $600.0 million may be increased to $1.0 billion at our option, subject to certain conditions. (d) Subject to borrower’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. The Term Loan is also subject to a 75 basis point floor. (e) The initial maximum facility size of $450.0 million may be increased to $650.0 million at our option, subject to certain conditions. (f) Facility carries a rolling 11 month term which may reset monthly with the lender’s consent not to exceed December 2018. This facility carries no maximum facility size. Amount herein reflects the outstanding balance as of June 30, 2016. (g) Facility carries a rolling 12 month term which may reset monthly with the lender’s consent. Current maturity is June 2017. This facility carries no maximum facility size. Amount herein reflects the outstanding balance as of June 30, 2016. (h) The date that is 270 days after the buyer delivers notice to seller, subject to a maximum date of May 2018. (i) The Woodstar Portfolio Mortgages carry a weighted average interest rate of 3.99% as of June 30, 2016. In the normal course of business, the Company is in discussions with its lenders to extend or amend any financing facilities which contain near term expirations. During the six months ended June 30, 2016, we executed four mortgage facilities with aggregate borrowings of $32.2 million to finance commercial real estate acquired by our Investing and Servicing Segment. As of June 30, 2016, these facilities carry a remaining weighted average term of 6.1 years. One of the facilities carry floating annual interest rates with average spreads of LIBOR + 2.25% while the remaining facilities carry average fixed annual interest rates of 3.50% . During the three and six months ended June 30, 2016, we assumed one and 17 federal, state and county sponsored mortgage facilities (“Woodstar Portfolio Government Financing”), respectively, associated with certain properties acquired in our Woodstar Portfolio with aggregate outstanding balances of $2.5 million and $129.2 million, respectively, as of the acquisition dates. During the three months ended June 30, 2016, we also assumed two other mortgage facilities (“Woodstar Portfolio Mortgages”) associated with properties acquired in our Woodstar Portfolio with aggregate outstanding balances of $18.6 million, as of the acquisition dates. In January 2016, we amended the CMBS Repo 2 facility to extend the maturity from December 2016 to December 2017. In March 2016, we amended the Lender 2 Repo 1 facility to upsize available borrowings from $500.0 million to $600.0 million. This additional $100.0 million of borrowing capacity is exclusively for the financing of conduit mortgage loans and therefore this component of the Lender 2 Repo 1 facility is separately presented in the secured financing agreements table above as Conduit Repo 4. In April 2016, we amended the Lender 4 Repo 2 facility to allow for up to $200.0 million of financing for conduit mortgage loan originations under the existing borrowing capacity. In April 2016, we terminated the Conduit Repo 1 facility. In May 2016, we amended the RMBS Repo 1 facility to upsize available borrowings from $125.0 million to $185.0 million and amend the maturity date to the earlier of (i) 270 days from when the lender delivers notice to the Company or (ii) May 2018. In June 2016, we expanded our CMBS Repo 2 facility to finance our acquisition of one first mortgage loan and one first mortgage loan portfolio, each of which had been securitized into single-borrower securitizations by the seller. This financing, which totaled €124.1 million as of June 30, 2016, matures in June 2020 and carries an annual interest rate of three-month EURIBOR + 2.00% . Our secured financing agreements contain certain financial tests and covenants. Should we breach certain of these covenants it may restrict our ability to pay dividends in the future. As of June 30, 2016, we were in compliance with all such covenants. The following table sets forth our five ‑year principal repayments schedule for secured financings assuming no defaults and excluding loans transferred as secured borrowings. Our credit facilities generally require principal to be paid down prior to the facilities’ respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The amount reflected in each period includes principal repayments on our credit facilities that would be required if (i) we received the repayments that we expect to receive on the investments that have been pledged as collateral under the credit facilities, as applicable, and (ii) the credit facilities that are expected to have amounts outstanding at their current maturity dates are extended where extension options are available to us (amounts in thousands): Repurchase Other Secured Agreements Financing Total 2016 (remainder of) $ $ $ 2017 2018 2019 2020 Thereafter Total $ $ $ Secured financing maturities for 2016 primarily relate to $62.9 million on the Lender 4 Repo 2 facility and $46.6 million on the Conduit Repo 4 facility. For the three and six months ended June 30, 2016, approximately $4.3 million and $8.2 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations. For the three and six months ended June 30, 2015, approximately $3.5 million and $7.0 million, respectively, of amortization of deferred financing costs was included in interest expense on our condensed consolidated statements of operations. The following table sets forth our outstanding balance of repurchase agreements related to the following asset collateral classes as of June 30, 2016 and December 31, 2015 (amounts in thousands): Class of Collateral June 30, 2016 December 31, 2015 Loans held-for-investment $ $ Loans held-for-sale Investment securities $ $ We seek to mitigate risks associated with our repurchase agreements by managing risk related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value. The margin call provisions under the majority of our repurchase facilities, consisting of 62% of these agreements, do not permit valuation adjustments based on capital markets activity. Instead, margin calls on these facilities are limited to collateral-specific credit marks. To monitor credit risk associated with the performance and value of our loans and investments, our asset management team regularly reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. For repurchase agreements containing margin call provisions for general capital markets activity, approximately 33% of these pertain to our loans held-for-sale, for which we manage credit risk through the purchase of credit index instruments. We further seek to manage risks associated with our repurchase agreements by matching the maturities and interest rate characteristics of our loans with the related repurchase agreements. |
Convertible Senior Notes
Convertible Senior Notes | 6 Months Ended |
Jun. 30, 2016 | |
Convertible Senior Notes | |
Convertible Senior Notes | |
Convertible Senior Notes | 10. Convertible Senior Notes On October 8, 2014, we issued $431.3 million of 3.75% Convertible Senior Notes due 2017 (the “2017 Notes”). On February 15, 2013, we issued $600.0 million of 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”). On July 3, 2013, we issued $460.0 million of 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”). The following summarizes the unsecured convertible senior notes (collectively, the “Convertible Notes”) outstanding as of June 30, 2016 (dollars in thousands): Remaining Principal Coupon Effective Conversion Maturity Period of Amount Rate Rate(1) Rate(2) Date Amortization 2017 Notes $ % % 10/15/2017 years 2018 Notes $ % % 3/1/2018 years 2019 Notes $ % % 1/15/2019 years As of As of June 30, 2016 December 31, 2015 Total principal $ $ Unamortized discount Unamortized deferred financing costs Carrying amount of debt components $ $ Carrying amount of conversion option equity components recorded in additional paid-in capital $ $ (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option, the value of which reduced the initial liability and was recorded in additional paid-in-capital. (2) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the indentures governing the Convertible Notes (including the applicable supplemental indentures) as a result of the spin-off of our former single family residential (“SFR”) segment to our stockholders in January 2014 and cash dividend payments. The if-converted value of the 2019 Notes exceeded their principal amount by $8.8 million at June 30, 2016 since the closing market price of the Company’s common stock of $20.72 per share exceeded the implicit conversion price of $20.20 per share. The if ‑converted values of the 2017 Notes and 2018 Notes were less than their principal amounts by $58.3 million and $18.8 million at June 30, 2016, respectively, since the closing market price of the Company’s common stock of $20.72 per share was less than the implicit conversion prices of $23.96 and $21.39 , respectively. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. As a result, conversion of this principal amount, totaling 62.5 million shares, was not included in the computation of diluted EPS. However, the conversion spread value for the 2019 Notes, representing 0.4 million shares and 0.5 million shares for the three and six months ended June 30, 2016, respectively, was included in the computation of diluted EPS as the notes were “in-the-money.” No dilution related to the 2017 Notes or 2018 Notes was included in the computation of diluted EPS for the three and six months ended June 30, 2016 as these notes were not “in-the-money.” See further discussion in Note 17. We did not repurchase any Convertible Notes during the three and six months ended June 30, 2016. During the three and six months ended June 30, 2015, we repurchased $14.5 million and $118.6 million aggregate principal amount of our 2019 Notes, respectively, for $16.5 million and $136.3 million plus transaction expenses of $0.1 million, respectively. The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the convertible security. The portion of the repurchase price attributable to the equity component totaled $17.7 million and was recognized as a reduction of additional paid-in capital during the six months ended June 30, 2015. The remaining repurchase price was attributable to the liability component. The difference between this amount and the net carrying amount of the liability and debt issuance costs was reflected as a loss on extinguishment of debt in our condensed consolidated statement of operations. For the three and six months ended June 30, 2015, the loss on extinguishment of debt totaled $0.6 million and $5.9 million, respectively, consisting principally of the write-off of unamortized debt discount. Conditions for Conversion Prior to April 15, 2017 for the 2017 Notes, September 1, 2017 for the 2018 Notes and July 15, 2018 for the 2019 Notes, the Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110% , in the case of the 2017 Notes, or 130% , in the case of the 2018 Notes and the 2019 Notes, of the conversion price of the respective 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 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) other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur. On or after April 15, 2017, in the case of the 2017 Notes, September 1, 2017, in the case of the 2018 Notes, and July 15, 2018, in the case of the 2019 Notes, holders may convert each of their Convertible Notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. |
Loan Securitization_Sale Activi
Loan Securitization/Sale Activities | 6 Months Ended |
Jun. 30, 2016 | |
Loan Securitization/Sale Activities | |
Loan Securitization/Sale Activities | 11. Loan Securitization/Sale Activities As described below, we regularly sell loans and notes under various strategies. We evaluate such sales as to whether they meet the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint, and transfer of control. Within the Investing and Servicing Segment, we originate commercial mortgage loans with the intent to sell these mortgage loans to VIEs for the purposes of securitization. These VIEs then issue CMBS that are collateralized in part by these assets, as well as other assets transferred to the VIE. In certain instances, we retain a subordinated interest in the VIE and serve as special servicer for the VIE. The following summarizes the fair value and par value of loans sold from our conduit platform, as well as the amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with these loans for the three and six months ended June 30, 2016 and 2015 (amounts in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Fair value of loans sold $ $ $ $ Par value of loans sold Repayment of repurchase agreements Within the Lending Segment, we originate or acquire loans and then subsequently sell a portion, which can be in various forms including first mortgages, A-Notes, senior participations and mezzanine loans. Typically, our motivation for entering into these transactions is to effectively create leverage on the subordinated position that we will retain and hold for investment. In certain instances, we continue to service the loan following its sale. The following table summarizes our loans sold and loans transferred as secured borrowings by the Lending Segment net of expenses (amounts in thousands): Loan Transfers Loan Transfers Accounted Accounted for as Secured for as Sales Borrowings Face Amount Proceeds Face Amount Proceeds For the Three Months Ended June 30, 2016 $ $ $ — $ — 2015 For the Six Months Ended June 30, 2016 $ $ $ — $ — 2015 During the three and six months ended June 30, 2016 and 2015, gains (losses) recognized by the Lending Segment on sales of loans were not material. |
Derivatives and Hedging Activit
Derivatives and Hedging Activity | 6 Months Ended |
Jun. 30, 2016 | |
Derivatives and Hedging Activity | |
Derivatives and Hedging Activity | 12. Derivatives and Hedging Activity Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions. Refer to Note 13 to the consolidated financial statements included in our Form 10-K for further discussion of our risk management objectives and policies. Designated Hedges Our objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In connection with our repurchase agreements, we have entered into six outstanding interest rate swaps that have been designated as cash flow hedges of the interest rate risk associated with forecasted interest payments. As of June 30, 2016, the aggregate notional amount of our interest rate swaps designated as cash flow hedges of interest rate risk totaled $66.4 million. Under these agreements, we will pay fixed monthly coupons at fixed rates ranging from 0.60% to 1.52% of the notional amount to the counterparty and receive floating rate LIBOR . Our interest rate swaps designated as cash flow hedges of interest rate risk have maturities ranging from August 2017 to May 2021. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and six months ended June 30, 2016 and 2015, we did not recognize any hedge ineffectiveness in earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the associated variable-rate debt. Over the next 12 months, we estimate that an additional $0.3 million will be reclassified as an increase to interest expense. We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of 59 months. Non-designated Hedges Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or which we have not elected to designate as hedges. We do not use these derivatives for speculative purposes but instead they are used to manage our exposure to foreign exchange rates, interest rate changes and certain credit spreads. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in gain (loss) on derivative financial instruments in our condensed consolidated statements of operations. We have entered into a series of forward contracts whereby we agreed to sell an amount of foreign currency for an agreed upon amount of USD at various dates through June 2020. These forward contracts were executed to economically fix the USD amounts of foreign denominated cash flows expected to be received by us related to foreign denominated loan investments and properties. The following table summarizes our non-designated foreign exchange (“Fx”) forwards, interest rate swaps, interest rate caps and credit index instruments as of June 30, 2016 (notional amounts in thousands): Aggregate Number Notional Notional Type of Derivative of Contracts Amount Currency Maturity Fx contracts – Buy Danish Krone ("DKK") DKK December 2016 Fx contracts – Buy Euros ("EUR") EUR December 2016 Fx contracts – Buy Norwegian Krone ("NOK") NOK December 2016 Fx contracts – Buy Swedish Krona ("SEK") SEK December 2016 Fx contracts – Sell Danish Krone ("DKK") DKK December 2016 Fx contracts – Sell Euros ("EUR") (1) EUR July 2016 – June 2020 Fx contracts – Sell Pounds Sterling ("GBP") GBP July 2016 – June 2019 Fx contracts – Sell Norwegian Krone ("NOK") NOK December 2016 Fx contracts – Sell Swedish Krona ("SEK") SEK December 2016 Interest rate swaps – Paying fixed rates USD July 2016 – July 2026 Interest rate swaps – Receiving fixed rates USD July 2017 – June 2026 Interest rate caps EUR May 2020 Interest rate caps USD June 2018 – October 2020 Credit index instruments USD September 2058 Total (1) Includes 49 Fx contracts executed to hedge our Euro currency exposure created by our acquisition of the Ireland Portfolio. As of June 30, 2016, these contracts have an aggregate notional amount of €246.9 million and varying maturities through June 2020. The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 (amounts in thousands): Fair Value of Derivatives Fair Value of Derivatives in an Asset Position (1) As of in a Liability Position (2) As of June 30, December 31, June 30, December 31, 2016 2015 2016 2015 Derivatives designated as hedging instruments: Interest rate swaps $ — $ $ $ Total derivatives designated as hedging instruments — Derivatives not designated as hedging instruments: Interest rate swaps and caps Foreign exchange contracts Credit index instruments — — Total derivatives not designated as hedging instruments Total derivatives $ $ $ $ (1) Classified as derivative assets in our condensed consolidated balance sheets. (2) Classified as derivative liabilities in our condensed consolidated balance sheets. The tables below present the effect of our derivative financial instruments on the condensed consolidated statements of operations and of comprehensive income for the three and six months ended June 30, 2016 and 2015 (amounts in thousands): Gain (Loss) Gain (Loss) Reclassified Gain (Loss) Recognized from AOCI Recognized Derivatives Designated as Hedging Instruments in OCI into Income in Income Location of Gain (Loss) For the Three Months Ended June 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2016 $ $ $ — Interest expense 2015 $ $ $ — Interest expense For the Six Months Ended June 30, 2016 $ $ $ — Interest expense 2015 $ $ $ — Interest expense Amount of Gain (Loss) Amount of Gain (Loss) Recognized in Income for the Recognized in Income for the Derivatives Not Designated Location of Gain (Loss) Three Months Ended June 30, Six Months Ended June 30, as Hedging Instruments Recognized in Income 2016 2015 2016 2015 Interest rate swaps and caps Gain (loss) on derivative financial instruments $ $ $ $ Foreign exchange contracts Gain (loss) on derivative financial instruments Credit index instruments Gain (loss) on derivative financial instruments $ $ $ $ |
Offsetting Assets and Liabiliti
Offsetting Assets and Liabilities | 6 Months Ended |
Jun. 30, 2016 | |
Offsetting Assets and Liabilities | |
Offsetting Assets and Liabilities | 13. Offsetting Assets and Liabilities The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting , which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands ): (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 June 30, 2016 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — As of December 31, 2015 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2016 | |
Variable Interest Entities | |
Variable Interest Entities | 14. Variable Interest Entities Investment Securities As discussed in Note 2, we evaluate all of our investments and other interests in entities for consolidation, including our investments in CMBS and our retained interests in securitization transactions we initiated, all of which are generally considered to be variable interests in VIEs. 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, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation. VIEs in which we are the Primary Beneficiary As discussed in Note 2, our implementation of ASU 2015-02 resulted in the consolidation of certain CMBS trusts where the right to remove the Company as special servicer was not exercisable without cause. These 14 trusts had $15.1 billion of VIE assets and $15.1 billion of VIE liabilities as of March 31, 2016. The carrying value of our CMBS investments in these 14 trusts, totaling $120.9 million, was eliminated in consolidation against VIE liabilities as of March 31, 2016. The inclusion of the assets and liabilities of securitization VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of securitization VIEs is generally limited to our investment in these entities. We are not obligated to provide, nor have we provided, any financial support for any of these consolidated structures. As discussed in Note 2, our implementation of ASU 2015-02 resulted in the determination that certain entities in which we hold controlling interests, which were already consolidated prior to the implementation of ASU 2015-02, are now considered VIEs. We are the primary beneficiaries of these VIEs, which were established to facilitate the purchase of certain properties acquired with third party minority interest partners, as we possess both the power to direct the activities of the VIEs that most significantly impact their economic performance and hold significant economic interests. These VIEs had assets of $140.2 million and liabilities of $62.2 million as of June 30, 2016. VIEs in which we are not the Primary Beneficiary In certain instances, we hold a variable interest in a VIE in the form of CMBS, but either (i) we are not appointed, or do not serve as, special servicer or (ii) an unrelated third party has the rights to unilaterally remove us as special servicer without cause. In these instances, we do not have the power to direct activities that most significantly impact the VIE’s economic performance. In other cases, the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant. For these structures, we are not deemed to be the primary beneficiary of the VIE, and we do not consolidate these VIEs. As of June 30, 2016, one of our CDO structures was in default, which pursuant to the underlying indentures, changes the rights of the variable interest holders. 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 June 30, 2016, this CDO structure was not consolidated. 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 June 30, 2016, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $114.3 million on a fair value basis. As of June 30, 2016, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances of $21.8 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations. As discussed in Note 2, our implementation of ASU 2015-02 resulted in the determination that certain unconsolidated entities in which we hold passive non-controlling interests are now considered VIEs. We are not the primary beneficiaries of these VIEs as we do not possess the power to direct the activities of the VIEs that most significantly impact their economic performance and therefore continue to report our interests, which totaled $131.4 million as of June 30, 2016, within investment in unconsolidated entities on our condensed consolidated balance sheet. Our maximum risk of loss is limited to our carrying value of the investments of $131.4 million plus $29.2 million of unfunded commitments related to one of these VIEs. |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Jun. 30, 2016 | |
Related-Party Transactions | |
Related-Party Transactions | 15. Related-Party Transaction s Management Agreement We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement. Base Management Fee. For the three months ended June 30, 2016 and 2015, approximately $15.1 million and $14.9 million, respectively, was incurred for base management fees . For the six months ended June 30, 2016 and 2015, approximately $30.2 million and $28.8 million, respectively, was incurred for base management fees. As of June 30, 2016 and December 31, 2015, there were $15.1 million and $15.2 million, respectively, of unpaid base management fees included in the related-party payable in our condensed consolidated balance sheets. Incentive Fee. For the three months ended June 30, 2016 and 2015, approximately $2.9 million and $4.1 million, respectively, was incurred for incentive fees. For the six months ended June 30, 2016 and 2015, approximately $7.5 million and $10.8 million, respectively, was incurred for incentive fees. As of June 30, 2016 and December 31, 2015, approximately $2.9 million and $21.8 million, respectively, of unpaid incentive fees were included in related-party payable in our condensed consolidated balance sheets. Expense Reimbursement. For the three months ended June 30, 2016 and 2015, approximately $1.5 million and $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 six months ended June 30, 2016 and 2015, approximately $2.6 million and $2.9 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of June 30, 2016 and December 31, 2015, approximately $1.9 million and $3.6 million, respectively, of unpaid reimbursable executive compensation and other expenses were 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 three months ended June 30, 2015, we granted 41,539 RSAs at a grant date fair value of $1.0 million. There were no RSAs granted during the three months ended June 30, 2016. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.6 million and $0.3 million during the three months ended June 30, 2016 and 2015, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the six months ended June 30, 2016 and 2015, we granted 169,104 and 78,119 RSAs, respectively, at grant date fair values of $3.3 million and $1.9 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.0 million and $0.3 million during the six months ended June 30, 2016 and 2015, respectively. These shares generally vest over a three -year period. Manager Equity Plan In May 2015, we granted 675,000 RSUs to our Manager under the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In connection with this grant and prior similar grants, we recognized share-based compensation expense of $ 5.3 million and $7.4 million within management fees in our condensed consolidated statements of operations for the three months ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016 and 2015, we recognized $10.1 million and $14.3 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants. Investments in Loans and Securities In December 2013, we acquired a subordinate CMBS investment in a securitization issued by an affiliate of our Manager. The security was acquired for $84.1 million and is secured by five regional malls in Ohio, California and Washington. In January 2016, we acquired an additional $9.7 million of this subordinate CMBS investment. In June 2016, we co-originated a £75.0 million first mortgage for the development of a three -property mixed use portfolio located in Greater London with SEREF, an affiliate of our Manager. We originated £60.0 million of the loan and SEREF originated £15.0 million. The loan matures in June 2019. Acquisitions from Consolidated CMBS Trusts Our Investing and Servicing Segment acquires interests in properties for its REO Portfolio from CMBS trusts, some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. During the three months ended June 30, 2016 and 2015, we acquired $60.5 million and $33.2 million, respectively, of net real estate assets from consolidated CMBS trusts and subsequently issued non-controlling interests of $2.4 million and $2.1 million, respectively. Also during the three months ended June 30, 2016, a partnership in which we hold a 50% interest acquired a real estate asset from a CMBS trust for $19.0 million. During the six months ended June 30, 2016 and 2015, we acquired $85.1 million and $33.2 million, respectively, of net real estate assets from consolidated CMBS trusts and subsequently issued non-controlling interests of $5.5 million and $2.1 million, respectively. Refer to Notes 3 and 7 for further discussion of these acquisitions. Our Investing and Servicing Segment also acquires controlling interests in performing and non-performing commercial mortgage loans from CMBS trusts, some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. During the three months ended June 30, 2016, we did not acquire any performing or non-performing loans from consolidated CMBS trusts. During the six months ended June 30, 2016, we acquired $9.7 million and $8.2 million of performing and non-performing loans, respectively, from consolidated CMBS trusts. Other Related-Party Arrangements During the three months ended March 31, 2016, we established a co-investment fund which provides key personnel with the opportunity to invest in certain properties included in our REO Portfolio. These personnel include certain of our employees as well as employees of affiliates of our Manager (collectively “Fund Participants”). The fund carries an aggregate commitment of $15.0 million and owns a 10% equity interest in REO Portfolio properties acquired subsequent to January 1, 2015. As of June 30, 2016, Fund Participants have fully funded their maximum expected capital contribution amount of $4.9 million. The capital contributed by Fund Participants is reflected on our condensed consolidated balance sheet as non-controlling interests in consolidated subsidiaries. In an effort to retain key personnel, the fund provides for disproportionate distributions which allows Fund Participants to earn an incremental 60% on all operating cash flows attributable to their capital account, net of a preferred return to us as general partner of the fund. Amounts earned by Fund Participants pursuant to this waterfall are reflected within net income attributable to non-controlling interests in our condensed consolidated statement of operations. During both the three and six months ended June 30, 2016, the non-controlling interests related to this fund recognized an immaterial loss. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity | |
Stockholders' Equity | 16. Stockholders’ Equity During the six months ended June 30, 2016, our board of directors declared the following dividends: Declare Date Record Date Ex-Dividend Date Payment Date Amount Frequency 5/9/16 6/30/16 6/28/16 7/15/16 $ Quarterly 2/25/16 3/31/16 3/29/16 4/15/16 $ Quarterly During the six months ended June 30, 2016, there were no shares issued under our At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”). During the six months ended June 30, 2016, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) were not material. There were no share repurchases during the three months ended June 30, 2016. During the six months ended June 30, 2016, we repurchased 1,052,889 shares of common stock for $19.7 million under our $500.0 million repurchase program. Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further information regarding the repurchase program. As of June 30, 2016, we have $282.1 million of remaining capacity to repurchase common stock or Convertible Notes under the repurchase program through January 2017. Equity Incentive Plans The Company currently maintains the Manager Equity Plan, the Starwood Property Trust, Inc. Equity Plan (the “Equity Plan”), and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (“Non-Executive Director Stock Plan”). Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further information regarding these plans. The table below summarizes our share awards granted or vested under the Manager Equity Plan during the six months ended June 30, 2016 and 2015 (dollars in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period May 2015 RSU $ 3 years January 2014 RSU 3 years January 2014 RSU 3 years As of June 30, 2016, there were 2.3 million shares available for future grants under the Manager Equity Plan, the Equity Plan and the Non-Executive Director Stock Plan. Schedule of Non-Vested Shares and Share Equivalents Non-Executive Weighted Average Director Manager Grant Date Fair Value Stock Plan Equity Plan Equity Plan Total (per share) Balance as of January 1, 2016 $ Granted — Vested — Forfeited — — Balance as of June 30, 2016 |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2016 | |
Earnings per Share | |
Earnings per Share | 17. Earnings per Share The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Basic Earnings Income attributable to STWD common stockholders $ $ $ $ Less: Income attributable to participating shares Basic earnings $ $ $ $ Diluted Earnings Basic — Income attributable to STWD common stockholders $ $ $ $ Less: Income attributable to participating shares Add: Undistributed earnings to participating shares — — Less: Undistributed earnings reallocated to participating shares — — Diluted earnings $ $ $ $ Number of Shares: Basic — Average shares outstanding Effect of dilutive securities — Convertible Notes Effect of dilutive securities — Contingently issuable shares Effect of dilutive securities — Unvested non-participating shares — — Diluted — Average shares outstanding Earnings Per Share Attributable to STWD Common Stockholders: Basic $ $ Diluted $ $ As of June 30, 2016 and 2015, participating shares of 1.2 million and 2.5 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Also as of June 30, 2016, there were 62.9 million potential shares of common stock contingently issuable upon the conversion of the Convertible Notes. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. As a result, this principal amount, representing 62.5 million shares at June 30, 2016, was not included in the computation of diluted EPS. However, as discussed in Note 10, the conversion options associated with the 2019 Notes are “in-the-money” as the if-converted value of the 2019 Notes exceeded their principal amount by $8.8 million at June 30, 2016. The dilutive effect to EPS is determined by dividing this “conversion spread value” by the average share price. The “conversion spread value” is the value that would be delivered to investors in shares based on the terms of the Convertible Notes, upon an assumed conversion. In calculating the dilutive effect of these shares, the treasury stock method was used and resulted in a dilution of 0.4 million shares and 0.5 million shares for the three and six months ended June 30, 2016, respectively. The conversion option associated with the 2017 Notes and 2018 Notes are “out-of-the-money” because the if-converted values of the 2017 Notes and 2018 Notes were less than their principal amounts by $58.3 million and $18.8 million, respectively, at June 30, 2016. Therefore, there was no dilutive effect to EPS for the 2017 Notes or 2018 Notes for the three and six months ended June 30, 2016. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2016 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | 18. Accumulated Other Comprehensive Income The changes in AOCI by component are as follows (amounts in thousands): Cumulative Unrealized Gain Effective Portion of (Loss) on Foreign Cumulative Loss on Available-for- Currency Cash Flow Hedges Sale Securities Translation Total Three Months Ended June 30, 2016 Balance at March 31, 2016 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — — Net period OCI Balance at June 30, 2016 $ $ $ $ Three Months Ended June 30, 2015 Balance at March 31, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — — Net period OCI Balance at June 30, 2015 $ $ $ $ Six Months Ended June 30, 2016 Balance at January 1, 2016 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — — Net period OCI Balance at June 30, 2016 $ $ $ $ Six Months Ended June 30, 2015 Balance at January 1, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at June 30, 2015 $ $ $ $ The reclassifications out of AOCI impacted the condensed consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 as follows (amounts in thousands): Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Six Months Affected Line Item Ended June 30, Ended June 30, in the Statements Details about AOCI Components 2016 2015 2016 2015 of Operations Losses on cash flow hedges: Interest rate contracts $ $ $ $ Interest expense Unrealized gains (losses) on available-for-sale securities: Interest realized upon collection — — — Interest income from investment securities Total reclassifications for the period $ $ $ $ |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value | |
Fair Value | 19. Fair Value GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below: Level I —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level II —Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level III —Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation Process We have valuation control processes in place to validate the fair value of the Company’s financial assets and liabilities measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. Refer to Note 20 to the consolidated financial statements included in our Form 10-K for further discussion of our valuation process. We determine the fair value of our assets and liabilities measured at fair value on a recurring and nonrecurring basis in accordance with the methodology described in our Form 10-K. Fair Value Disclosures The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the condensed consolidated balance sheets by their level in the fair value hierarchy as of June 30, 2016 and December 31, 2015 (amounts in thousands): June 30, 2016 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ December 31, 2015 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ The changes in financial assets and liabilities classified as Level III are as follows for the three and six months ended June 30, 2016 and 2015 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended June 30, 2016 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2016 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — — Purchases / Originations — — — Sales — — — — Issuances — — — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — — Deconsolidation of VIEs — — — June 30, 2016 balance $ $ $ $ $ $ $ Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2016 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Three Months Ended June 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — — Deconsolidation of VIEs — — — June 30, 2015 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2015 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Six Months Ended June 30, 2016 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2016 balance $ $ $ $ $ $ $ Impact of ASU 2015-02 Adoption (1) — — — — — Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — — Purchases / Originations — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — Deconsolidation of VIEs — — — June 30, 2016 balance $ $ $ $ $ $ $ Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2016 $ $ $ $ $ $ $ (1) As discussed in Notes 2 and 14, our implementation of ASU 2015-02 resulted in the consolidation of certain CMBS trusts effective January 1, 2016, which required the elimination of $17.5 million of domestic servicing rights associated with these newly consolidated trusts. Domestic Loans Servicing VIE Six Months Ended June 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — Deconsolidation of VIEs — — — June 30, 2015 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2015 $ $ $ $ $ $ $ Amounts were transferred from Level II to Level III due to a decrease in the observable relevant market activity and amounts were transferred from Level III to Level II due to an increase in the observable relevant market activity. The following table presents the fair values, all of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the condensed consolidated balance sheets (amounts in thousands ): June 30, 2016 December 31, 2015 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment and loans transferred as secured borrowings $ $ $ $ HTM securities European servicing rights Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ $ $ $ Convertible senior notes 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 as of (1) June 30, 2016 Technique Input June 30, 2016 December 31, 2015 Loans held-for-sale, fair value option $ Discounted cash flow Yield (b) 4.2% - 6.2% 4.8% - 5.3% Duration (c) 5.0 - 10.7 years 5.0 - 10.0 years RMBS Discounted cash flow Constant prepayment rate (a) 2.9% - 15.6% 2.6% - 17.8% Constant default rate (b) 0.9% - 8.8% 1.0% - 8.9% Loss severity (b) 7% - 79% (e) 10% - 79% (e) Delinquency rate (c) 2% - 28% 2% - 29% Servicer advances (a) 18% - 94% 30% - 94% Annual coupon deterioration (b) 0% - 0.6% 0% - 0.5% Putback amount per projected total collateral loss (d) 0% - 15% 0% - 11% CMBS Discounted cash flow Yield (b) 0% - 332.8% 0% - 435.8% Duration (c) 0 - 9.5 years 0 - 18.5 years Domestic servicing rights Discounted cash flow Debt yield (a) 8.00% 8.25% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets Discounted cash flow Yield (b) 0% - 779.7 % 0% - 920.2% Duration (c) 0 - 14.3 years 0 - 17.5 years VIE liabilities Discounted cash flow Yield (b) 0% - 779.7% 0% - 920.2% Duration (c) 0 - 14.3 years 0 - 17.5 years (1) The ranges of significant unobservable inputs are represented in percentages and years. Sensitivity of the Fair Value to Changes in the Unobservable Inputs (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 (lower or higher) fair value measurement depending on the structural features of the security in question. (d) Any delay in the putback recovery date leads to a decrease in fair value, for the majority of securities in our RMBS portfolio. (e) 66% and 76% of the portfolio falls within a range of 45% - 80% as of June 30, 2016 and December 31, 2015, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Income Taxes | 20. Income Taxes Certain of our subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT. Our TRSs engage in various real estate related operations, including special servicing of commercial real estate, originating and securitizing commercial mortgage loans, and investing in entities which engage in real estate related operations. The majority of our TRSs are held within the Investing and Servicing Segment. As of June 30, 2016 and December 31, 2015, approximately $867.8 m illion and $858.5 million, respectively, of the Investing and Servicing Segment’s assets, including $72.4 million and $185.6 million in cash, respectively, were owned by TRS entities. Our TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs. The following table is a reconciliation of our U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the three and six months ended June 30, 2016 and 2015 (dollars in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Federal statutory tax rate $ % $ % $ % $ % REIT and other non-taxable income % % % % State income taxes % % — % % Federal benefit of state tax deduction % % — % % Valuation allowance — — % % — — % % Other % % — % % Effective tax rate $ % $ % $ % $ % |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 21. Commitments and Contingencie s As of June 30, 2016, we had future funding commitments on 54 loans totaling $1.7 billion, of which we expect to fund $1.4 billion. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios or executions of new leases before advances are made to the borrower. In the ordinary course of business, we provide various forms of guarantees. In limited instances, specifically involving construction loans, the Company has guaranteed the future funding obligations of certain third party lenders in the event that such third parties fail to fund their proportionate share of the obligation in a timely manner. We are currently unaware of any circumstances which would require us to make payments under any of these guarantees. Management is not aware of any other contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business that would have a material adverse effect on our condensed consolidated financial statements. |
Segment Data
Segment Data | 6 Months Ended |
Jun. 30, 2016 | |
Segment Data | |
Segment and Data | 22. Segment Dat a 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. The table below presents our results of operations for the three months ended June 30, 2016 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Total costs and expenses Income (loss) before other (loss) income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — (Loss) gain on sale of investments and other assets, net — — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Other income, net — — — Total other (loss) income — Income (loss) before income taxes Income tax provision — — — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the three months ended June 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Total costs and expenses Income (loss) before other (loss) income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — — (Loss) gain on derivative financial instruments, net — — Foreign currency gain (loss), net — — Loss on extinguishment of debt — — — — Other income, net — — — — Total other (loss) income Income (loss) before income taxes Income tax provision — — — — Net income (loss) Net income attributable to non-controlling interests — — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the six months ended June 30, 2016 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other (loss) income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Other income, net — — Total other (loss) income Income (loss) before income taxes Income tax provision — — — Net income (loss) Net (income) loss attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the six months ended June 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — Gain (loss) on derivative financial instruments, net — — Foreign currency loss, net — — Loss on extinguishment of debt — — — — Other income, net — — — Total other income (loss) Income (loss) before income taxes Income tax benefit (provision) — — — Net income (loss) Net income attributable to non-controlling interests — — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our condensed consolidated balance sheet as of June 30, 2016 b y business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ $ $ $ $ Restricted cash — — Loans held-for-investment, net — — — Loans held-for-sale — — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — Intangible assets — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — Accrued interest receivable — — — Other assets VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — Secured financing agreements, net — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income (loss) — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ The table below presents our condensed consolidated balance sheet as of December 31, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ $ $ $ $ Restricted cash — — Loans held-for-investment, net — — — — Loans held-for-sale — — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — Intangible assets — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — Accrued interest receivable — — — Other assets VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — — Secured financing agreements, net — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income (loss) — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events | |
Subsequent Events | 23. Subsequent Events Dividend Declaration On August 4, 2016, our board of directors declared a dividend of $0 .48 per share for the third quarter of 2016, which is payable on October 17, 2016 to common stockholders of record as of September 30, 2016. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Summary of Significant Accounting Policies | |
Balance Sheet Presentation of the Investing and Servicing Segment"s Variable Interest Entities | Balance Sheet Presentation of the Investing and Servicing Segment’s Variable Interest Entities As noted above, the Investing and Servicing Segment operates an investment business that acquires unrated, investment grade and non-investment grade rated CMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. Because the Investing and Servicing Segment often serves as the special servicer of the trusts in which it invests, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs. 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, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation. Refer to the segment data in Note 22 for a presentation of the Investing and Servicing Segment without consolidation of these VIEs. |
Basis of Accounting and Principles of Consolidation | Basis of Accounting and Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the operating results for the full year. 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, or (iii) became significant since December 31, 2015 due to a corporate action or increase in the significance of the underlying business activity. |
Variable Interest Entities | Variable Interest Entities 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 consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE. To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. Effective January 1, 2016, we implemented Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis , which specifies that the right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE. In connection with the implementation of this ASU, we consolidated VIE assets and VIE liabilities from CMBS trusts as of March 31, 2016 where the right to remove the Company as special servicer was not exercisable without cause. Our implementation of the ASU also resulted in the determination that certain entities in which we hold interests, which prior to the implementation of the ASU were not considered VIEs, are now considered VIEs as the limited partners of these entities do not collectively possess (i) the right to remove the general partner without cause or (ii) the right to participate in significant decisions made by the partnership. The application of the ASU to these particular entities did not change our respective conclusions as to whether or not they should be consolidated. We applied the provisions of this ASU using a modified retrospective approach which does not require the restatement of prior period financial statements. There was no cumulative-effect adjustment to equity upon adoption. Refer to Note 14 for further discussion of the impact of our implementation of ASU 2015-02. To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us. Our purchased investment securities include CMBS which are unrated and non-investment grade rated securities issued by CMBS trusts. In certain cases, we may contract to provide special servicing activities for these CMBS trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation. For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation. We perform ongoing reassessments of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change. We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our condensed consolidated statements of operations. The residual difference shown on our condensed consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs. 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 CMBS 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.” Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a CMBS trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP. In addition to sharing a similar measurement method as the loans in a CMBS trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a CMBS trust. REO assets generally represent a very small percentage of the overall asset pool of a CMBS trust. In a new issue CMBS trust there are no REO assets. We estimate that REO assets constitute approximately 4% of our consolidated securitization VIE assets, with the remaining 96% representing loans . However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity . In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually. Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities. For these reasons, the assets of our securitization VIEs are presented in the aggregate. |
Fair Value Option | Fair Value Option The guidance in ASC 825, Financial Instruments , provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method. We have elected the fair value option for eligible financial assets and liabilities of our consolidated securitization VIEs, loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for mortgage loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform were made due to the short-term nature of these instruments. The fair value elections for investments in marketable equity securities were made because the shares are listed on an exchange, which allows us to determine the fair value using a quoted price from an active market. |
Fair Value Measurements | Fair Value Measurements We measure our mortgage ‑backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. 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, no 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 VIE, we maximize the use of observable inputs over unobservable inputs. We also acknowledge that our principal market for selling CMBS assets is the securitization market where the market participant is considered to be a CMBS trust or a collateralized debt obligation (“CDO”). This methodology results in the fair value of the assets of a static CMBS trust being equal to the fair value of its liabilities. Refer to Note 19 for further discussion regarding our fair value measurements. |
Loans Receivable and Provision for Loan Losses | Loans Held-for-Investment and Provision for Loan Losses Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees, and origination costs as applicable, unless the loans are deemed impaired. We evaluate each loan classified as held-for-investment for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Actual losses, if any, could ultimately differ from these estimates. We perform a quarterly review of our portfolio of loans. In connection with this review, we assess the performance of each loan and assign a risk rating based on several factors, including risk of loss, loan-to-collateral value ratio (“LTV”), collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” through “5”, from less risk to greater risk, in connection with this review. |
Deferred Financing Costs | Deferred Financing Costs In accordance with ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) , effective January 1, 2016 we modified our presentation of deferred financing costs in our condensed consolidated balance sheets to present such costs as a direct deduction from the carrying value of the related debt liability, consistent with debt discounts, rather than as a separate deferred asset as the previous guidance required. Deferred financing costs will continue to be amortized to interest expense over the terms of the respective debt agreements. As required by this ASU, we applied this change retrospectively to our prior period condensed consolidated balance sheet presentation. |
Earnings Per Share | Earnings Per Share We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested restricted stock (“RSAs”) and restricted stock units (“RSUs”), (ii) shares contingently issuable to our Manager, and (iii) the “in-the-money” conversion options associated with our outstanding convertible senior notes (see further discussion in Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the three and six months ended June 30, 2016 and 2015, the two-class method resulted in the most dilutive EPS calculation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any), and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows. |
Reclassifications | Reclassifications In connection with our implementation of ASU 2015-03 discussed above, we reclassified deferred financing costs of $38.3 million and $1.4 million previously reported in other assets to secured financing agreements, net and convertible senior notes, net, respectively, within our condensed consolidated balance sheet as of December 31, 2015. |
Recent Accounting Developments | Recent Accounting Developments On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers , which establishes key principles by which an entity determines the amount and timing of revenue recognized from customer contracts. At issuance, the ASU was effective for the first interim or annual period beginning after December 15, 2016. On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which delayed the effective date of ASU 2014-09 by one year, resulting in the ASU becoming effective for the first interim or annual period beginning after December 15, 2017. Early application, which was not permissible under the initial effectiveness timeline, is now permissible though no earlier than as of the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities , which impacts the accounting for equity investments, financial liabilities under the fair value option, and disclosure requirements for financial instruments. The ASU shall be applied prospectively and is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early application is not permitted. We are in the process of assessing the impact this ASU will have on the Company. On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly changed. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018 by applying a modified retrospective approach. Early application is permitted. We are in the process of assessing the impact this ASU will have on the Company. On March 14, 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815) – Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that the change in counterparty to a derivative designated in a hedging relationship, in and of itself, would not require that the hedging relationship be de-designated for hedge accounting purposes. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On March 15, 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323) – Simplifying the Transition to the Equity Method of Accounting, which amends existing guidance to require that in instances where an investee is transitioning from the cost method of accounting to the equity method of accounting due to an increase in ownership level or degree of influence, the investee applies the equity method of accounting prospectively from the date significant influence is obtained, whereas existing guidance requires an investee to retrospectively apply the equity method of accounting for all previous periods in which the investment was held. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On March 17, 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which amends the principal-versus-agent implementation guidance and illustrations in the FASB’s revenue recognition standard issued in ASU 2014-09. The ASU provides further guidance to assist an entity in the determination of whether the nature of its promise to its customer is to provide the underlying goods or services, meaning the entity is a principal, or to arrange for a third party to provide the underlying goods or services, meaning the entity is an agent. The ASU is effective for the first interim or annual period beginning after December 15, 2017. Early application is permissible though no earlier than the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On March 30, 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting , which seeks to simplify the accounting for employee share-based payment transactions, including the accounting for associated income taxes and forfeitures. The ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted in any interim or annual period. We do not expect the application of this ASU to materially impact the Company. On April 14, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing , which amends guidance and illustrations in the FASB’s revenue recognition standard issued in ASU 2014-09 regarding the identification of performance obligations and the implementation guidance on licensing arrangements. The ASU is effective for the first interim or annual period beginning after December 15, 2017. Early application is permissible though no earlier than the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that existing GAAP currently mandates. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument compared to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. The ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. Early application is permissible though no earlier than the first interim or annual period beginning after December 15, 2018. We are in the process of assessing the impact this ASU will have on the Company. |
Acquisitions (Tables)
Acquisitions (Tables) - Woodstar Portfolio, Ireland Portfolio and REIS Portfolio | 6 Months Ended |
Jun. 30, 2016 | |
Summary of assets acquired and liabilities assumed | The following table summarizes the identified assets acquired and liabilities assumed at the respective acquisition dates (amounts in thousands): 2016 2015 Woodstar REO Woodstar REO Ireland Assets acquired: Portfolio Portfolio Portfolio Portfolio Portfolio Cash and cash equivalents $ $ — $ — $ — $ — Restricted cash — — — — Properties Intangible assets Other assets Total assets acquired Liabilities assumed: Accounts payable, accrued expenses and other liabilities Secured financing agreements — — Total liabilities assumed Non-controlling interests — — — Net assets acquired $ $ $ $ $ |
Schedule of unaudited pro forma revenue and net income | The pro-forma revenues and net income attributable to the Company for the three and six months ended June 30, 2016 and 2015, assuming all the properties acquired within the Woodstar Portfolio, REO Portfolio and the Ireland Portfolio were acquired on January 1, 2014 for the 2015 acquisitions and January 1, 2015 for the 2016 acquisitions, are as follows (amounts in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenues $ $ $ $ Net income attributable to STWD Net income per share - Basic Net income per share - Diluted |
Schedule of adjustments related to pro forma revenue and net income | Pro-forma net income was adjusted to include the following estimated incremental management fees the combined entity would have incurred (amounts in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Management fee expense addition $ $ $ $ |
Loans (Tables)
Loans (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Loans | |
Summary of investments in mortgages and loans by subordination class | The following tables summarize our investments in mortgages and loans by subordination class as of June 30, 2016 and December 31, 2015 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) June 30, 2016 Value Amount Coupon (years)(3) First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale, fair value option elected % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ December 31, 2015 First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale, fair value option elected % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ (1) 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 $949.2 million and $930.0 million being classified as first mortgages as of June 30, 2016 and December 31, 2015, respectively. (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. (3) 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. |
Summary of investments in floating rate loans | The following table summarizes our investments in floating rate loans (dollars in thousands): June 30, 2016 December 31, 2015 Carrying Carrying Index Base Rate Value Base Rate Value One-month LIBOR USD % $ % $ Three-month LIBOR GBP N/A — % LIBOR floor 0.15 - 3.00 % (1) 0.15 - 3.00 % (1) Total $ $ (1) The weighted-average LIBOR floor was 0.32% and 0.31% as of June 30, 2016 and December 31, 2015, respectively. |
Schedule of internal rating categories | As of June 30, 2016, the risk ratings for loans subject to our rating system, which excludes loans on the cost recovery method and loans for which the fair value option has been elected, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ % 2 — — % 3 — % 4 — — % 5 — — — — % N/A — — — — % $ $ $ $ $ $ % As of December 31, 2015, the risk ratings for loans subject to our rating system by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ — % 2 — — % 3 — % 4 — — % 5 — — — — — — — % N/A — — — — % $ $ $ $ $ $ % |
Schedule of activity in allowance for loan losses | The following table presents the activity in our allowance for loan losses (amounts in thousands): For the Six Months Ended June 30, 2016 2015 Allowance for loan losses at January 1 $ $ Provision for loan losses Charge-offs — — Recoveries — — Allowance for loan losses at June 30 $ $ Recorded investment in loans related to the allowance for loan loss $ $ |
Schedule of activity in loan portfolio | The activity in our loan portfolio was as follows (amounts in thousands): For the Six Months Ended June 30, 2016 2015 Balance at January 1 $ $ Acquisitions/originations/additional funding Capitalized interest (1) Basis of loans sold (2) Loan maturities/principal repayments Discount accretion/premium amortization Changes in fair value Unrealized foreign currency remeasurement loss Change in loan loss allowance, net Transfer to/from other asset classifications Balance at June 30 $ $ (1) Represents accrued interest income on loans whose terms do not require current payment of interest. (2) See Note 11 for additional disclosure on these transactions. |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Schedule of investment securities | Investment securities were comprised of the following as of June 30, 2016 and December 31, 2015 (amounts in thousands): Carrying Value as of June 30, 2016 December 31, 2015 RMBS, available-for-sale $ $ CMBS, fair value option (1) Held-to-maturity (“HTM”) securities Equity security, fair value option Subtotal — Investment securities VIE eliminations (1) Total investment securities $ $ (1) Certain fair value option CMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810. |
Schedule of purchases, sales and principal collections for all investment securities | Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands): Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Three Months Ended June 30, 2016 Purchases $ $ — $ $ $ — $ Sales — — — — Principal collections — — Three Months Ended June 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — — — Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Six Months Ended June 30, 2016 Purchases $ $ — $ $ $ — $ Sales — — — — Principal collections — — Six Months Ended June 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — |
Summary of investments in available-for-sale RMBS and single-borrower CMBS where the fair value option has not been elected | The tables below summarize various attributes of our investments in available-for-sale RMBS as of June 30, 2016 and December 31, 2015 (dollars in thousands): Unrealized Gains or (Losses) Recognized in AOCI Purchase Recorded Gross Gross Net Amortized Credit Amortized Non-Credit Unrealized Unrealized Fair Value Cost OTTI Cost OTTI Gains Losses Adjustment Fair Value June 30, 2016 RMBS $ $ $ $ $ $ $ $ December 31, 2015 RMBS $ $ $ $ $ $ — $ $ Weighted Average Coupon (1) Weighted Average Rating WAL (Years) (2) June 30, 2016 RMBS % CCC December 31, 2015 RMBS % B− (1) Calculated using the June 30, 2016 and December 31, 2015 one-month LIBOR rate of 0.465% and 0.430% , respectively, for floating rate securities. (2) Represents the WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments. |
Reconciliation of aggregate principal balance to amortized cost for RMBS and single-borrower CMBS, excluding CMBS where the fair value option is elected | The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of June 30, 2016 and December 31, 2015 (amounts in thousands): June 30, 2016 December 31, 2015 Principal balance $ $ Accretable yield Non-accretable difference Total discount Amortized cost $ $ |
Schedule of changes to accretable yield and non-accretable difference for RMBS and single-borrower CMBS, excluding CMBS where the fair value option is elected | The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the three and six months ended June 30, 2016 (amounts in thousands): Non-Accretable Three Months Ended June 30, 2016 Accretable Yield Difference Balance as of April 1, 2016 $ $ Accretion of discount — Principal recoveries, net — Purchases Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of June 30, 2016 $ $ Six Months Ended June 30, 2016 Balance as of January 1, 2016 $ $ Accretion of discount — Principal recoveries, net — Purchases Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of June 30, 2016 $ $ |
Schedule of gross unrealized losses and estimated fair value of securities in an unrealized loss position, excluding CMBS where the fair value option is elected | The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of June 30, 2016 and December 31, 2015, and for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands): 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 June 30, 2016 RMBS $ $ $ $ As of December 31, 2015 RMBS $ $ $ $ |
Schedule of investment in fair value option CMBS | The table below summarizes various attributes of our investment in fair value option CMBS as of June 30, 2016 and December 31, 2015: Weighted Average Coupon Weighted Average Rating (1) WAL (Years) (2) June 30, 2016 CMBS, fair value option % B− December 31, 2015 CMBS, fair value option % CCC+ (1) As of June 30, 2016 and December 31, 2015, excludes $6.2 million and $51.3 million, respectively, in fair value option CMBS that are not rated. (2) The WAL of each security is calculated based on the period of time over which we expect to receive principal cash flows. Expected principal cash flows are based on contractual payments net of expected losses. |
Held-to-maturity | |
Schedule of gross unrealized losses and estimated fair value of securities in an unrealized loss position, excluding CMBS where the fair value option is elected | The table below summarizes unrealized gains and losses of our investments in HTM securities as of June 30, 2016 and December 31, 2015 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value June 30, 2016 CMBS $ $ — $ $ Preferred interests — Total $ $ — $ $ December 31, 2015 CMBS $ $ $ $ Preferred interests — Total $ $ $ $ |
Summary of investments in HTM securities | The table below summarizes the maturities of our HTM CMBS and our HTM preferred equity interests in limited liability companies that own commercial real estate as of June 30, 2016 (amounts in thousands): Preferred CMBS Interests Total Less than one year $ $ — $ One to three years — Three to five years — Thereafter — Total $ $ $ |
Properties (Tables)
Properties (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Properties | |
Summary of properties | Depreciable Life June 30, 2016 December 31, 2015 Property Segment Land and land improvements 0 – 10 years $ $ Buildings and building improvements 10 – 40 years Furniture & fixtures 2 – 7 years Investing and Servicing Segment Land and land improvements 0 – 10 years Buildings and building improvements 10 – 40 years Furniture & fixtures 3 – 7 years Properties, cost Less: accumulated depreciation Properties, net $ $ |
Investment in Unconsolidated 37
Investment in Unconsolidated Entities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Investment in Unconsolidated Entities | |
Summary of investments in unconsolidated entities | The table below summarizes our investments in unconsolidated entities as of June 30, 2016 and December 31, 2015 (dollars in thousands ): Participation / Carrying value as of Ownership % (1) June 30, 2016 December 31, 2015 Equity method: Retail Fund 33% $ $ Investor entity which owns equity in an online real estate auction company 50% Equity interests in commercial real estate (2) 16% - 50% Various 25% - 50% Cost method: Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% Various 0% - 3% $ $ (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) During the three months ended June 30, 2016, a partnership in which we hold a 50% interest acquired a real estate asset from a CMBS trust for $19.0 million. As of June 30, 2016, our investment in the partnership was $3.7 million. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets | |
Summary of intangibles assets | The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of June 30, 2016 and December 31, 2015 (amounts in thousands): As of June 30, 2016 As of December 31, 2015 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ $ — $ $ $ — $ European servicing rights (1) In-place lease intangible assets Favorable lease intangible assets Total net intangible assets $ $ $ $ $ $ (1) The fair value as of June 30, 2016 and December 31, 2015 was $4.4 million and $5.3 million, respectively. |
Summary of activity within intangible assets | The following table summarizes the activity within intangible assets for the six months ended June 30, 2016 (amounts in thousands): Domestic European In-place Lease Favorable Lease Servicing Servicing Intangible Intangible Rights Rights Assets Assets Total Balance as of January 1, 2016 $ $ $ $ $ Impact of ASU 2015-02 Adoption (1) — — — Acquisition of additional Woodstar Portfolio properties — — — Acquisition of additional REO Portfolio properties — — Amortization — Foreign exchange (loss) gain — Changes in fair value due to changes in inputs and assumptions — — — Balance as of June 30, 2016 $ $ $ $ $ (1) As discussed in Notes 2 and 14, our implementation of ASU 2015-02 resulted in the consolidation of certain CMBS trusts effective January 1, 2016, which required the elimination of $17.5 million of domestic servicing rights associated with these newly consolidated trusts. |
Schedule of future amortization expense | The following table sets forth the estimated aggregate amortization of our European servicing rights, in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands ): 2016 (remainder of) $ 2017 2018 2019 2020 Thereafter Total $ |
Secured Financing Agreements (T
Secured Financing Agreements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Secured Financing Agreements. | |
Summary of secured financing agreements | The following table is a summary of our secured financing agreements in place as of June 30, 2016 and December 31, 2015 (dollars in thousands): Carrying value at Current Extended Pledged Asset Maximum June 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2016 2015 Lender 1 Repo 1 (b) (b) LIBOR + 1.85% to 5.25% $ $ $ $ Lender 2 Repo 1 Oct 2017 Oct 2020 LIBOR + 1.75% to 2.75% Lender 3 Repo 1 May 2017 May 2019 LIBOR + 2.50% to 2.85% Lender 4 Repo 1 Oct 2016 Oct 2017 LIBOR + 2.00% — — — Lender 4 Repo 2 Dec 2018 Dec 2020 LIBOR + 2.00% to 2.50% (c) — Lender 6 Repo 1 Aug 2018 N/A LIBOR + 2.50% to 3.00% Lender 7 Secured Financing Jul 2018 Jul 2019 LIBOR + 2.75% (d) (e) — Conduit Repo 1 N/A N/A N/A — — — Conduit Repo 2 Nov 2016 N/A LIBOR + 2.10% — Conduit Repo 3 Feb 2018 Feb 2019 LIBOR + 2.10% Conduit Repo 4 Oct 2017 Oct 2020 LIBOR + 2.25% — CMBS Repo 1 (f) (f) LIBOR + 1.90% — CMBS Repo 2 Jun 2020 N/A LIBOR/EURIBOR + 2.00% to 2.70% CMBS Repo 3 (g) (g) LIBOR + 1.40% to 1.85% RMBS Repo 1 (h) N/A LIBOR + 1.90% Investing and Servicing Segment Property Mortgages Jun 2018 to Jun 2026 N/A Various Ireland Portfolio Mortgage May 2020 N/A EURIBOR + 1.69% Woodstar Portfolio Mortgages Jul 2017 to Jan 2026 N/A 3.72% to 7.46% (i) Woodstar Portfolio Government Financing Jun 2017 to Jun 2049 N/A 1.00% to 5.00% Term Loan Apr 2020 N/A LIBOR + 2.75% (d) FHLB Advances Nov 2016 N/A LIBOR + 0.37% $ $ Unamortized premium (discount), net Unamortized deferred financing costs $ $ (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans is January 2017 before extension options and January 2019 assuming exercise of initial extension options. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions and not to exceed January 2023. (c) The initial maximum facility size of $600.0 million may be increased to $1.0 billion at our option, subject to certain conditions. (d) Subject to borrower’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. The Term Loan is also subject to a 75 basis point floor. (e) The initial maximum facility size of $450.0 million may be increased to $650.0 million at our option, subject to certain conditions. (f) Facility carries a rolling 11 month term which may reset monthly with the lender’s consent not to exceed December 2018. This facility carries no maximum facility size. Amount herein reflects the outstanding balance as of June 30, 2016. (g) Facility carries a rolling 12 month term which may reset monthly with the lender’s consent. Current maturity is June 2017. This facility carries no maximum facility size. Amount herein reflects the outstanding balance as of June 30, 2016. (h) The date that is 270 days after the buyer delivers notice to seller, subject to a maximum date of May 2018. (i) The Woodstar Portfolio Mortgages carry a weighted average interest rate of 3.99% as of June 30, 2016. |
Schedule of five-year principal repayments for secured financings | The amount reflected in each period includes principal repayments on our credit facilities that would be required if (i) we received the repayments that we expect to receive on the investments that have been pledged as collateral under the credit facilities, as applicable, and (ii) the credit facilities that are expected to have amounts outstanding at their current maturity dates are extended where extension options are available to us (amounts in thousands): Repurchase Other Secured Agreements Financing Total 2016 (remainder of) $ $ $ 2017 2018 2019 2020 Thereafter Total $ $ $ |
Schedule of outstanding balance of repurchase agreements related to the following asset collateral classes | The following table sets forth our outstanding balance of repurchase agreements related to the following asset collateral classes as of June 30, 2016 and December 31, 2015 (amounts in thousands): Class of Collateral June 30, 2016 December 31, 2015 Loans held-for-investment $ $ Loans held-for-sale Investment securities $ $ |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Convertible Senior Notes. | |
Schedule of the unsecured convertible senior notes outstanding | The following summarizes the unsecured convertible senior notes (collectively, the “Convertible Notes”) outstanding as of June 30, 2016 (dollars in thousands): Remaining Principal Coupon Effective Conversion Maturity Period of Amount Rate Rate(1) Rate(2) Date Amortization 2017 Notes $ % % 10/15/2017 years 2018 Notes $ % % 3/1/2018 years 2019 Notes $ % % 1/15/2019 years As of As of June 30, 2016 December 31, 2015 Total principal $ $ Unamortized discount Unamortized deferred financing costs Carrying amount of debt components $ $ Carrying amount of conversion option equity components recorded in additional paid-in capital $ $ (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option, the value of which reduced the initial liability and was recorded in additional paid-in-capital. (2) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the indentures governing the Convertible Notes (including the applicable supplemental indentures) as a result of the spin-off of our former single family residential (“SFR”) segment to our stockholders in January 2014 and cash dividend payments. |
Loan Securitization_Sale Acti41
Loan Securitization/Sale Activities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Investment and Servicing Segment | |
Summary of fair value and par value of loans sold and amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with the loans | The following summarizes the fair value and par value of loans sold from our conduit platform, as well as the amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with these loans for the three and six months ended June 30, 2016 and 2015 (amounts in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Fair value of loans sold $ $ $ $ Par value of loans sold Repayment of repurchase agreements |
Lending Segment | |
Summary of loans sold and loans transferred as secured borrowings by the Lending segment net of expenses | The following table summarizes our loans sold and loans transferred as secured borrowings by the Lending Segment net of expenses (amounts in thousands): Loan Transfers Loan Transfers Accounted Accounted for as Secured for as Sales Borrowings Face Amount Proceeds Face Amount Proceeds For the Three Months Ended June 30, 2016 $ $ $ — $ — 2015 For the Six Months Ended June 30, 2016 $ $ $ — $ — 2015 |
Derivatives and Hedging Activ42
Derivatives and Hedging Activity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Derivatives and Hedging Activity | |
Summary of foreign exchange ("Fx") forwards, interest rate swaps, interest rate caps and credit index instruments | The following table summarizes our non-designated foreign exchange (“Fx”) forwards, interest rate swaps, interest rate caps and credit index instruments as of June 30, 2016 (notional amounts in thousands): Aggregate Number Notional Notional Type of Derivative of Contracts Amount Currency Maturity Fx contracts – Buy Danish Krone ("DKK") DKK December 2016 Fx contracts – Buy Euros ("EUR") EUR December 2016 Fx contracts – Buy Norwegian Krone ("NOK") NOK December 2016 Fx contracts – Buy Swedish Krona ("SEK") SEK December 2016 Fx contracts – Sell Danish Krone ("DKK") DKK December 2016 Fx contracts – Sell Euros ("EUR") (1) EUR July 2016 – June 2020 Fx contracts – Sell Pounds Sterling ("GBP") GBP July 2016 – June 2019 Fx contracts – Sell Norwegian Krone ("NOK") NOK December 2016 Fx contracts – Sell Swedish Krona ("SEK") SEK December 2016 Interest rate swaps – Paying fixed rates USD July 2016 – July 2026 Interest rate swaps – Receiving fixed rates USD July 2017 – June 2026 Interest rate caps EUR May 2020 Interest rate caps USD June 2018 – October 2020 Credit index instruments USD September 2058 Total (1) Includes 49 Fx contracts executed to hedge our Euro currency exposure created by our acquisition of the Ireland Portfolio. As of June 30, 2016, these contracts have an aggregate notional amount of €246.9 million and varying maturities through June 2020. |
Schedule of fair values of derivative financial instruments | The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 (amounts in thousands): Fair Value of Derivatives Fair Value of Derivatives in an Asset Position (1) As of in a Liability Position (2) As of June 30, December 31, June 30, December 31, 2016 2015 2016 2015 Derivatives designated as hedging instruments: Interest rate swaps $ — $ $ $ Total derivatives designated as hedging instruments — Derivatives not designated as hedging instruments: Interest rate swaps and caps Foreign exchange contracts Credit index instruments — — Total derivatives not designated as hedging instruments Total derivatives $ $ $ $ (1) Classified as derivative assets in our condensed consolidated balance sheets. (2) Classified as derivative liabilities in our condensed consolidated balance sheets. |
Schedule of effect of derivative financial instruments on the consolidated statements of operations and of comprehensive income | Gain (Loss) Gain (Loss) Reclassified Gain (Loss) Recognized from AOCI Recognized Derivatives Designated as Hedging Instruments in OCI into Income in Income Location of Gain (Loss) For the Three Months Ended June 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2016 $ $ $ — Interest expense 2015 $ $ $ — Interest expense For the Six Months Ended June 30, 2016 $ $ $ — Interest expense 2015 $ $ $ — Interest expense |
Schedule of Gain / (Loss) recognized in Income for Derivatives Not Designated as Hedging Instruments | Amount of Gain (Loss) Amount of Gain (Loss) Recognized in Income for the Recognized in Income for the Derivatives Not Designated Location of Gain (Loss) Three Months Ended June 30, Six Months Ended June 30, as Hedging Instruments Recognized in Income 2016 2015 2016 2015 Interest rate swaps and caps Gain (loss) on derivative financial instruments $ $ $ $ Foreign exchange contracts Gain (loss) on derivative financial instruments Credit index instruments Gain (loss) on derivative financial instruments $ $ $ $ |
Offsetting Assets and Liabili43
Offsetting Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Offsetting Assets and Liabilities | |
Schedule of offsetting assets and liabilities | The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting , which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands ): (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 June 30, 2016 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — As of December 31, 2015 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity | |
Schedule of dividends declared by board of directors | Declare Date Record Date Ex-Dividend Date Payment Date Amount Frequency 5/9/16 6/30/16 6/28/16 7/15/16 $ Quarterly 2/25/16 3/31/16 3/29/16 4/15/16 $ Quarterly |
Summary of share awards granted under the Manager Equity Plan | The table below summarizes our share awards granted or vested under the Manager Equity Plan during the six months ended June 30, 2016 and 2015 (dollars in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period May 2015 RSU $ 3 years January 2014 RSU 3 years January 2014 RSU 3 years |
Schedule of Non-Vested Shares and Share Equivalents | Non-Executive Weighted Average Director Manager Grant Date Fair Value Stock Plan Equity Plan Equity Plan Total (per share) Balance as of January 1, 2016 $ Granted — Vested — Forfeited — — Balance as of June 30, 2016 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings per Share | |
Reconciliation of net income from continuing operations and the number of shares of common stock used in the computation of basic EPS and diluted EPS | The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, 2016 2015 2016 2015 Basic Earnings Income attributable to STWD common stockholders $ $ $ $ Less: Income attributable to participating shares Basic earnings $ $ $ $ Diluted Earnings Basic — Income attributable to STWD common stockholders $ $ $ $ Less: Income attributable to participating shares Add: Undistributed earnings to participating shares — — Less: Undistributed earnings reallocated to participating shares — — Diluted earnings $ $ $ $ Number of Shares: Basic — Average shares outstanding Effect of dilutive securities — Convertible Notes Effect of dilutive securities — Contingently issuable shares Effect of dilutive securities — Unvested non-participating shares — — Diluted — Average shares outstanding Earnings Per Share Attributable to STWD Common Stockholders: Basic $ $ Diluted $ $ |
Accumulated Other Comprehensi46
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in AOCI by component | The changes in AOCI by component are as follows (amounts in thousands): Cumulative Unrealized Gain Effective Portion of (Loss) on Foreign Cumulative Loss on Available-for- Currency Cash Flow Hedges Sale Securities Translation Total Three Months Ended June 30, 2016 Balance at March 31, 2016 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — — Net period OCI Balance at June 30, 2016 $ $ $ $ Three Months Ended June 30, 2015 Balance at March 31, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — — Net period OCI Balance at June 30, 2015 $ $ $ $ Six Months Ended June 30, 2016 Balance at January 1, 2016 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — — Net period OCI Balance at June 30, 2016 $ $ $ $ Six Months Ended June 30, 2015 Balance at January 1, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at June 30, 2015 $ $ $ $ |
Schedule of reclassifications out of AOCI that impacted the condensed consolidated statements of operations | Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Six Months Affected Line Item Ended June 30, Ended June 30, in the Statements Details about AOCI Components 2016 2015 2016 2015 of Operations Losses on cash flow hedges: Interest rate contracts $ $ $ $ Interest expense Unrealized gains (losses) on available-for-sale securities: Interest realized upon collection — — — Interest income from investment securities Total reclassifications for the period $ $ $ $ |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value | |
Schedule of financial assets and liabilities carried at fair value on a recurring basis | The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the condensed consolidated balance sheets by their level in the fair value hierarchy as of June 30, 2016 and December 31, 2015 (amounts in thousands): June 30, 2016 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ December 31, 2015 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ |
Schedule of changes in financial assets and liabilities classified as Level III | The changes in financial assets and liabilities classified as Level III are as follows for the three and six months ended June 30, 2016 and 2015 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended June 30, 2016 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2016 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — — Purchases / Originations — — — Sales — — — — Issuances — — — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — — Deconsolidation of VIEs — — — June 30, 2016 balance $ $ $ $ $ $ $ Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2016 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Three Months Ended June 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — — Deconsolidation of VIEs — — — June 30, 2015 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2015 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Six Months Ended June 30, 2016 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2016 balance $ $ $ $ $ $ $ Impact of ASU 2015-02 Adoption (1) — — — — — Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — — Purchases / Originations — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — Deconsolidation of VIEs — — — June 30, 2016 balance $ $ $ $ $ $ $ Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2016 $ $ $ $ $ $ $ (1) As discussed in Notes 2 and 14, our implementation of ASU 2015-02 resulted in the consolidation of certain CMBS trusts effective January 1, 2016, which required the elimination of $17.5 million of domestic servicing rights associated with these newly consolidated trusts. Domestic Loans Servicing VIE Six Months Ended June 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidation of VIEs — — — Deconsolidation of VIEs — — — June 30, 2015 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2015 $ $ $ $ $ $ $ |
Schedule of fair value of financial instruments not carried at fair value | The following table presents the fair values, all of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the condensed consolidated balance sheets (amounts in thousands ): June 30, 2016 December 31, 2015 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment and loans transferred as secured borrowings $ $ $ $ HTM securities European servicing rights Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ $ $ $ Convertible senior notes |
Schedule of quantitative information for Level 3 Measurements for assets and liabilities measured at fair value on recurring basis | 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 as of (1) June 30, 2016 Technique Input June 30, 2016 December 31, 2015 Loans held-for-sale, fair value option $ Discounted cash flow Yield (b) 4.2% - 6.2% 4.8% - 5.3% Duration (c) 5.0 - 10.7 years 5.0 - 10.0 years RMBS Discounted cash flow Constant prepayment rate (a) 2.9% - 15.6% 2.6% - 17.8% Constant default rate (b) 0.9% - 8.8% 1.0% - 8.9% Loss severity (b) 7% - 79% (e) 10% - 79% (e) Delinquency rate (c) 2% - 28% 2% - 29% Servicer advances (a) 18% - 94% 30% - 94% Annual coupon deterioration (b) 0% - 0.6% 0% - 0.5% Putback amount per projected total collateral loss (d) 0% - 15% 0% - 11% CMBS Discounted cash flow Yield (b) 0% - 332.8% 0% - 435.8% Duration (c) 0 - 9.5 years 0 - 18.5 years Domestic servicing rights Discounted cash flow Debt yield (a) 8.00% 8.25% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets Discounted cash flow Yield (b) 0% - 779.7 % 0% - 920.2% Duration (c) 0 - 14.3 years 0 - 17.5 years VIE liabilities Discounted cash flow Yield (b) 0% - 779.7% 0% - 920.2% Duration (c) 0 - 14.3 years 0 - 17.5 years (1) The ranges of significant unobservable inputs are represented in percentages and years. Sensitivity of the Fair Value to Changes in the Unobservable Inputs (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 (lower or higher) fair value measurement depending on the structural features of the security in question. (d) Any delay in the putback recovery date leads to a decrease in fair value, for the majority of securities in our RMBS portfolio. |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Schedule of reconciliation of federal income tax determined using statutory federal tax rate to reported income tax provision | The following table is a reconciliation of our U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the three and six months ended June 30, 2016 and 2015 (dollars in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Federal statutory tax rate $ % $ % $ % $ % REIT and other non-taxable income % % % % State income taxes % % — % % Federal benefit of state tax deduction % % — % % Valuation allowance — — % % — — % % Other % % — % % Effective tax rate $ % $ % $ % $ % |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Data | |
Schedule of results of operations by business segment | The table below presents our results of operations for the three months ended June 30, 2016 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Total costs and expenses Income (loss) before other (loss) income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — (Loss) gain on sale of investments and other assets, net — — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Other income, net — — — Total other (loss) income — Income (loss) before income taxes Income tax provision — — — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the three months ended June 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Total costs and expenses Income (loss) before other (loss) income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — — (Loss) gain on derivative financial instruments, net — — Foreign currency gain (loss), net — — Loss on extinguishment of debt — — — — Other income, net — — — — Total other (loss) income Income (loss) before income taxes Income tax provision — — — — Net income (loss) Net income attributable to non-controlling interests — — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the six months ended June 30, 2016 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other (loss) income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Other income, net — — Total other (loss) income Income (loss) before income taxes Income tax provision — — — Net income (loss) Net (income) loss attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the six months ended June 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income (loss): Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — Gain (loss) on derivative financial instruments, net — — Foreign currency loss, net — — Loss on extinguishment of debt — — — — Other income, net — — — Total other income (loss) Income (loss) before income taxes Income tax benefit (provision) — — — Net income (loss) Net income attributable to non-controlling interests — — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ |
Schedule of condensed consolidated balance sheet by business segment | The table below presents our condensed consolidated balance sheet as of June 30, 2016 b y business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ $ $ $ $ Restricted cash — — Loans held-for-investment, net — — — Loans held-for-sale — — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — Intangible assets — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — Accrued interest receivable — — — Other assets VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — Secured financing agreements, net — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income (loss) — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ The table below presents our condensed consolidated balance sheet as of December 31, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ $ $ $ $ Restricted cash — — Loans held-for-investment, net — — — — Loans held-for-sale — — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — Intangible assets — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — Accrued interest receivable — — — Other assets VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — — Secured financing agreements, net — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income (loss) — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ |
Business and Organization (Deta
Business and Organization (Details) | 6 Months Ended |
Jun. 30, 2016segment | |
Business and Organization | |
Number of reportable business segments | 3 |
Minimum annual REIT taxable income distributable to stockholders (as a percent) | 90.00% |
Summary of Significant Accoun51
Summary of Significant Accounting Policies - VIE & Fair Value (Details) | Jun. 30, 2016 |
Variable Interest Entities | |
REO assets as a percent of consolidated VIE assets | 4.00% |
Loans as a percent of consolidated VIE assets | 96.00% |
Summary of Significant Accoun52
Summary of Significant Accounting Policies - reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Reclassifications to financial statements | |||||
Other assets | $ 118,050 | $ 118,050 | $ 102,479 | ||
Other revenues | 979 | $ 1,390 | 2,169 | $ 3,137 | |
Other expense | 100 | $ 375 | |||
Deferred financing costs, net of amortization | $ 32,588 | $ 32,588 | 38,336 | ||
Accounting Standards Update 2015-03 | Secured financing agreements | Reclassification Adjustment | |||||
Reclassifications to financial statements | |||||
Deferred financing costs, net of amortization | 38,300 | ||||
Accounting Standards Update 2015-03 | Convertible Senior Notes | Reclassification Adjustment | |||||
Reclassifications to financial statements | |||||
Deferred financing costs, net of amortization | $ 1,400 |
Acquisitions (Details)
Acquisitions (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016USD ($)item$ / shares | Mar. 31, 2016item | Jun. 30, 2015USD ($)$ / shares | Jun. 30, 2016USD ($)item$ / shares | Jun. 30, 2015USD ($)$ / shares | Dec. 31, 2015USD ($)ft²propertyitem | Jun. 29, 2016USD ($) | |
Liabilities assumed: | |||||||
Revenues | $ 199,992 | $ 178,660 | $ 395,485 | $ 357,509 | |||
Net income (loss) | 112,071 | 117,640 | 139,117 | 238,419 | |||
Bargain purchase gains | 8,406 | ||||||
Depreciation and amortization | 34,664 | 9,079 | |||||
Gain (loss) on derivative financial instruments, net | 20,253 | (19,530) | (4,465) | 5,093 | |||
Goodwill | 140,437 | 140,437 | $ 140,437 | ||||
Pro forma revenue and net income | |||||||
Revenues | 405,577 | 428,261 | |||||
Net income attributable to STWD | $ 131,819 | $ 237,563 | |||||
Net income per share - Basic | $ / shares | $ 0.55 | $ 1.03 | |||||
Net income per share - Diluted | $ / shares | $ 0.55 | $ 1.02 | |||||
Woodstar Portfolio, Ireland Portfolio and REIS Portfolio | |||||||
Pro forma revenue and net income | |||||||
Revenues | 202,304 | 212,251 | |||||
Net income attributable to STWD | $ 102,983 | $ 115,354 | |||||
Net income per share - Basic | $ / shares | $ 0.43 | $ 0.49 | |||||
Net income per share - Diluted | $ / shares | $ 0.43 | $ 0.48 | |||||
Management fee expense addition | $ 175 | $ 1,966 | $ 663 | $ 4,335 | |||
Woodstar Portfolio | |||||||
Acquisitions | |||||||
Number of properties in portfolio investment | item | 32 | 32 | |||||
Weighted average occupancy percentage | 98.00% | ||||||
Number of units | item | 8,948 | 8,948 | |||||
Number of acquired properties closed | item | 2 | 12 | 14 | ||||
Number of units acquired | item | 628 | 3,710 | |||||
Assets acquired: | |||||||
Cash and cash equivalents | $ 6,254 | $ 6,254 | |||||
Properties | 245,430 | 245,430 | 339,040 | ||||
Intangible assets | 8,174 | 8,174 | 11,337 | ||||
Other assets | 16,417 | 16,417 | 652 | ||||
Total assets acquired | 276,275 | 276,275 | 351,029 | $ 48,900 | |||
Liabilities assumed: | |||||||
Accounts payable, accrued expenses and other liabilities | 19,666 | 19,666 | 18,030 | ||||
Secured financing agreements | 150,763 | 150,763 | 8,982 | ||||
Total liabilities assumed | 170,429 | 170,429 | 27,012 | $ 22,100 | |||
Net assets acquired | 105,846 | 105,846 | $ 324,017 | ||||
Revenues | 14,600 | ||||||
Net income (loss) | 5,000 | ||||||
Bargain purchase gains | 8,400 | 8,400 | |||||
Depreciation and amortization | 9,000 | ||||||
Acquisition related costs | 800 | ||||||
Goodwill | 0 | 0 | |||||
Ireland Portfolio | |||||||
Acquisitions | |||||||
Number of properties in portfolio investment | property | 13 | ||||||
Area of property | ft² | 600,000 | ||||||
Assets acquired: | |||||||
Restricted cash | $ 10,829 | ||||||
Properties | 445,369 | ||||||
Intangible assets | 59,529 | ||||||
Other assets | 2,508 | ||||||
Total assets acquired | 518,235 | ||||||
Liabilities assumed: | |||||||
Accounts payable, accrued expenses and other liabilities | 17,552 | ||||||
Secured financing agreements | 283,010 | ||||||
Total liabilities assumed | 300,562 | ||||||
Net assets acquired | 217,673 | ||||||
Goodwill | 0 | ||||||
Ireland Portfolio | Lender 6 Mortgage Facility | |||||||
Acquisitions | |||||||
Debt incurred to partially fund acquisition | 328,600 | ||||||
REO Portfolio | |||||||
Assets acquired: | |||||||
Properties | 68,096 | 68,096 | 128,218 | ||||
Intangible assets | 25,387 | 25,387 | 19,381 | ||||
Other assets | 2,858 | 2,858 | 4,973 | ||||
Total assets acquired | 96,341 | 96,341 | 152,572 | ||||
Liabilities assumed: | |||||||
Accounts payable, accrued expenses and other liabilities | 3,063 | 3,063 | 6,998 | ||||
Total liabilities assumed | 3,063 | 3,063 | 6,998 | ||||
Non-controlling interests | 5,492 | 5,492 | 6,904 | ||||
Net assets acquired | 87,786 | 87,786 | $ 138,670 | ||||
Net Leased Office Property | Ireland Portfolio | |||||||
Acquisitions | |||||||
Number of acquired properties closed | property | 12 | ||||||
Multifamily Property | Ireland Portfolio | |||||||
Acquisitions | |||||||
Number of acquired properties closed | property | 1 | ||||||
Investment and Servicing Segment | REO Portfolio | |||||||
Acquisitions | |||||||
Number of acquired properties closed | item | 14 | ||||||
Purchase price | 58,000 | 87,800 | $ 138,700 | ||||
Purchase price of properties - non-performing loans | 8,200 | 8,200 | |||||
Liabilities assumed: | |||||||
Goodwill | $ 0 | $ 0 |
Loans - Held for Investment (De
Loans - Held for Investment (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Investments in loans | ||||
Total gross loans | $ 6,031,123 | $ 6,269,546 | ||
Loan loss allowance (loans held-for-investment) | (7,297) | (6,029) | $ (9,009) | $ (6,031) |
Carrying Value | 6,023,826 | 6,263,517 | ||
Face Amount | 6,092,193 | 6,335,023 | ||
Loans with variable rates of interest | $ 5,080,421 | 5,052,055 | ||
Loans with variable rates of interest (as a percent) | 89.10% | |||
Weighted average spread of loans (as a percent) | 5.90% | |||
1-month LIBOR | ||||
Investments in loans | ||||
Loans with variable rates of interest | $ 572,062 | $ 438,641 | ||
Effective variable rate basis (as a percent) | 0.4651% | 0.4295% | ||
3-month LIBOR | ||||
Investments in loans | ||||
Loans with variable rates of interest | $ 375,467 | |||
Effective variable rate basis (as a percent) | 0.5904% | |||
LIBOR floor | ||||
Investments in loans | ||||
Loans with variable rates of interest | $ 4,508,359 | $ 4,237,947 | ||
LIBOR floor | Weighted-average | ||||
Investments in loans | ||||
Effective variable rate basis (as a percent) | 0.32% | 0.31% | ||
LIBOR floor | Minimum | ||||
Investments in loans | ||||
Effective variable rate basis (as a percent) | 0.15% | 0.15% | ||
LIBOR floor | Maximum | ||||
Investments in loans | ||||
Effective variable rate basis (as a percent) | 3.00% | 3.00% | ||
Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 5,700,749 | $ 5,979,108 | ||
Face Amount | 5,762,229 | 6,043,313 | ||
Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | 237,106 | 203,865 | ||
Face Amount | $ 235,296 | $ 203,710 | ||
Weighted Average Coupon (as a percent) | 5.00% | 4.90% | ||
Weighted Average Life | 9 years 9 months 18 days | 9 years 9 months 18 days | ||
Loans transferred as secured borrowings | ||||
Investments in loans | ||||
Total gross loans | $ 93,268 | $ 86,573 | ||
Face Amount | $ 94,668 | $ 88,000 | ||
Weighted Average Coupon (as a percent) | 6.10% | 6.10% | ||
Weighted Average Life | 2 years | 2 years 4 months 24 days | ||
First Mortgages: | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 4,538,986 | $ 4,723,852 | ||
Face Amount | $ 4,592,601 | $ 4,776,576 | ||
Weighted Average Coupon (as a percent) | 5.80% | 6.00% | ||
Weighted Average Life | 2 years 4 months 24 days | 2 years 8 months 12 days | ||
Subordinated mortgages | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 392,208 | $ 392,563 | ||
Face Amount | $ 413,228 | $ 416,713 | ||
Weighted Average Coupon (as a percent) | 8.50% | 8.50% | ||
Weighted Average Life | 3 years | 3 years 4 months 24 days | ||
Mezzanine Loans | ||||
Investments in loans | ||||
Carrying Value | $ 949,200 | $ 930,000 | ||
Mezzanine Loans | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | 769,555 | 862,693 | ||
Face Amount | $ 756,400 | $ 850,024 | ||
Weighted Average Coupon (as a percent) | 9.90% | 9.90% | ||
Weighted Average Life | 2 years 1 month 6 days | 2 years 6 months |
Loans - Ratings (Details)
Loans - Ratings (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016USD ($)loan | Dec. 31, 2015USD ($) | |
Investments in loans | ||
Total gross loans | $ 6,031,123 | $ 6,269,546 |
Total gross loans (as a percent) | 100.00% | 100.00% |
Amount of loan impairment charges on individual loans held-for-investment | $ 0 | $ 0 |
Rating 1 | ||
Investments in loans | ||
Total gross loans | $ 3,070 | 664 |
Total gross loans (as a percent) | 0.10% | |
Rating 1 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 65.00% | |
Rating 2 | ||
Investments in loans | ||
Total gross loans | $ 789,139 | $ 675,678 |
Total gross loans (as a percent) | 13.10% | 10.80% |
Rating 2 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 70.00% | |
Rating 3 | ||
Investments in loans | ||
Total gross loans | $ 4,660,465 | $ 4,987,459 |
Total gross loans (as a percent) | 77.30% | 79.60% |
Rating 3 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 80.00% | |
Rating 4 | ||
Investments in loans | ||
Total gross loans | $ 279,146 | $ 401,880 |
Total gross loans (as a percent) | 4.60% | 6.40% |
Allowance for loan losses as a percent of carrying amount | 1.50% | |
Rating 4 | Minimum | ||
Investments in loans | ||
LTV (as a percent) | 80.00% | |
Rating 4 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 90.00% | |
Rating 5 | ||
Investments in loans | ||
Total gross loans | $ 62,197 | |
Total gross loans (as a percent) | 1.00% | |
Allowance for loan losses as a percent of carrying amount | 5.00% | |
Rating 5 | Minimum | ||
Investments in loans | ||
LTV (as a percent) | 90.00% | |
N/A | ||
Investments in loans | ||
Total gross loans | $ 237,106 | $ 203,865 |
Total gross loans (as a percent) | 3.90% | 3.20% |
Total loans held-for-investment | ||
Investments in loans | ||
Total gross loans | $ 5,700,749 | $ 5,979,108 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | ||
Investments in loans | ||
Total gross loans | 4,538,986 | 4,723,852 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 1 | ||
Investments in loans | ||
Total gross loans | 3,070 | 664 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 2 | ||
Investments in loans | ||
Total gross loans | 606,666 | 496,372 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 3 | ||
Investments in loans | ||
Total gross loans | 3,728,584 | 3,979,247 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 4 | ||
Investments in loans | ||
Total gross loans | 200,666 | 247,569 |
Total loans held-for-investment | Subordinated mortgages | ||
Investments in loans | ||
Total gross loans | 392,208 | 392,563 |
Total loans held-for-investment | Subordinated mortgages | Rating 2 | ||
Investments in loans | ||
Total gross loans | 86,069 | 88,857 |
Total loans held-for-investment | Subordinated mortgages | Rating 3 | ||
Investments in loans | ||
Total gross loans | 285,921 | 270,435 |
Total loans held-for-investment | Subordinated mortgages | Rating 4 | ||
Investments in loans | ||
Total gross loans | 20,218 | 33,271 |
Total loans held-for-investment | Mezzanine Loans | ||
Investments in loans | ||
Total gross loans | 769,555 | 862,693 |
Total loans held-for-investment | Mezzanine Loans | Rating 2 | ||
Investments in loans | ||
Total gross loans | 96,404 | 90,449 |
Total loans held-for-investment | Mezzanine Loans | Rating 3 | ||
Investments in loans | ||
Total gross loans | 552,692 | 651,204 |
Total loans held-for-investment | Mezzanine Loans | Rating 4 | ||
Investments in loans | ||
Total gross loans | 58,262 | 121,040 |
Total loans held-for-investment | Mezzanine Loans | Rating 5 | ||
Investments in loans | ||
Total gross loans | 62,197 | |
Loans held-for-sale | ||
Investments in loans | ||
Total gross loans | $ 237,106 | 203,865 |
Number of held-for-sale loans with the fair value option elected that were 90 days past due or greater or on nonaccrual status | loan | 0 | |
Loans held-for-sale | N/A | ||
Investments in loans | ||
Total gross loans | $ 237,106 | 203,865 |
Loans transferred as secured borrowings | ||
Investments in loans | ||
Total gross loans | 93,268 | 86,573 |
Loans transferred as secured borrowings | Rating 3 | ||
Investments in loans | ||
Total gross loans | $ 93,268 | $ 86,573 |
Loans - Activity in Portfolio (
Loans - Activity in Portfolio (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | |
Activity in allowance for loan losses | ||||
Allowance for loan losses at the beginning of the period | $ 6,029 | $ 6,031 | ||
Provision for loan losses | 1,268 | 2,978 | ||
Allowance for loan losses at the end of the period | $ 7,297 | $ 9,009 | 7,297 | 9,009 |
Recorded investment in loans related to the allowance for loan loss | 341,343 | 493,274 | 341,343 | 493,274 |
Activity in loan portfolio | ||||
Balance at the beginning of the period | 6,263,517 | 6,300,285 | ||
Acquisitions/origination/additional funding | 1,492,845 | 2,150,080 | ||
Capitalized Interest | 44,875 | 33,509 | ||
Basis of loans sold | (596,454) | (1,411,912) | ||
Loan maturities/principal repayments | (1,199,205) | (695,750) | ||
Discount accretion/premium amortization | 23,362 | 18,139 | ||
Changes in fair value | 13,235 | 10,831 | 20,126 | 31,962 |
Unrealized foreign currency remeasurement loss | (33,325) | (4,419) | ||
Change in loan loss allowance, net | (1,268) | (2,978) | ||
Transfer to/from other asset classifications | 9,353 | (172) | ||
Balance at the end of the period | $ 6,023,826 | $ 6,418,744 | $ 6,023,826 | $ 6,418,744 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Investment Securities | |||||||
Investment securities | $ 898,803 | $ 724,947 | |||||
Purchases | $ 266,305 | $ 80,176 | $ 350,642 | $ 147,423 | |||
Sales | 1,269 | 385 | 1,269 | 5,098 | |||
Principal collections | 25,200 | 236,037 | 47,544 | 247,774 | |||
Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 1,835,372 | $ 1,550,166 | |||||
Available-for-sale | One-month LIBOR | |||||||
Investment Securities | |||||||
Effective variable rate basis (as a percent) | 0.465% | 0.43% | |||||
Fair value option | VIE eliminations | |||||||
Investment Securities | |||||||
Investment securities | $ (936,569) | $ (825,219) | |||||
Held-to-maturity | |||||||
Investment Securities | |||||||
Purchases | 195,036 | 79,926 | 204,730 | 138,435 | |||
Principal collections | 1,861 | 228,910 | 5,091 | 228,935 | |||
Held-to-maturity | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 520,342 | 321,244 | |||||
RMBS | |||||||
Investment Securities | |||||||
Purchases | 88,336 | ||||||
Principal collections | 23,008 | 18,614 | |||||
Portion of securities with variable rate | 205,000 | ||||||
RMBS | Available-for-sale | |||||||
Investment Securities | |||||||
Purchases | 46,866 | ||||||
Principal collections | 16,197 | 7,127 | |||||
Purchase Amortized Cost | 221,587 | 149,102 | |||||
Credit OTTI | (10,185) | (10,185) | |||||
Recorded Amortized Cost | 211,402 | 138,917 | |||||
Non-Credit OTTI | (151) | (340) | |||||
Gross Unrealized Gains | 40,146 | 37,647 | |||||
Gross Unrealized Losses | (137) | ||||||
Net Fair Value Adjustment | 39,858 | 37,307 | |||||
Fair Value | $ 251,260 | 176,224 | |||||
Portion of securities with variable rate | $ 122,700 | ||||||
Portion of securities with variable rate (as a percent) | 81.60% | 69.70% | |||||
Principal balance | $ 408,521 | $ 233,976 | |||||
Accretable yield | (78,116) | (68,345) | $ (68,345) | (78,116) | (68,345) | ||
Non-accretable difference | (119,003) | (26,714) | |||||
Total discount | (197,119) | (95,059) | |||||
Amortized cost | 211,402 | 138,917 | |||||
Credit deteriorated RMBS | 377,000 | 199,000 | |||||
Accretable yield related to credit deteriorated RMBS | $ 68,400 | $ 57,700 | |||||
Changes to accretable yield | |||||||
Balance at the beginning of the period | 68,345 | ||||||
Accretion of discount | (3,742) | (7,157) | |||||
Purchases | 9,765 | 9,147 | |||||
Transfer to/from non-accretable difference | 4,467 | 7,781 | |||||
Balance at the end of the period | 78,116 | 78,116 | 68,345 | ||||
Changes to non accretable difference | |||||||
Balance at the beginning of the period | 82,550 | 26,714 | |||||
Principal write-downs | 4,283 | 3,994 | |||||
Purchases | 36,637 | 96,076 | |||||
Transfer to/from non-accretable difference | (4,467) | (7,781) | |||||
Balance at the end of the period | 119,003 | $ 119,003 | $ 26,714 | ||||
RMBS | Available-for-sale | LIBOR | |||||||
Investment Securities | |||||||
Variable rate, weighted average spread (as a percent) | 1.25% | 0.43% | |||||
RMBS | Available-for-sale | B- | |||||||
Investment Securities | |||||||
Weighted Average Coupon (as a percent) | 1.80% | 1.30% | |||||
WAL | 6 years | 6 years 2 months 12 days | |||||
RMBS | Available-for-sale | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 251,260 | $ 176,224 | |||||
RMBS | Available-for-sale | Available-for-sale | |||||||
Investment Securities | |||||||
Accretable yield | (67,626) | $ (68,345) | $ (68,345) | $ (78,116) | $ (68,345) | ||
Changes to accretable yield | |||||||
Balance at the beginning of the period | 67,626 | 68,345 | |||||
Balance at the end of the period | 78,116 | $ 78,116 | $ 68,345 | ||||
CMBS | |||||||
Investment Securities | |||||||
Principal collections | 224 | ||||||
CMBS | Fair value option | |||||||
Investment Securities | |||||||
Purchases | 24,403 | 250 | |||||
Sales | 1,269 | $ 385 | |||||
Principal collections | $ 7,142 | ||||||
Weighted Average Coupon (as a percent) | 5.70% | 3.90% | |||||
WAL | 1 year 9 months 18 days | 7 years 4 months 24 days | |||||
CMBS | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 1,050,909 | $ 1,038,200 | |||||
Equity security | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 12,861 | 14,498 | |||||
CMBS, fair value option | |||||||
Investment Securities | |||||||
Purchases | $ 57,576 | 8,988 | |||||
Sales | 1,269 | 5,098 | |||||
Principal collections | $ 19,445 | $ 1 | |||||
Amount not rated | 6,200 | $ 51,300 | |||||
Portion of securities with variable rate | $ 0 |
Investment Securities - AFS and
Investment Securities - AFS and Fair Value Option (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
RMBS | |||||
Unrealized Losses | |||||
Portion of securities with variable rate | $ 205,000 | $ 205,000 | |||
RMBS | Available-for-sale | |||||
Investment Securities | |||||
Cost of third party management | 300 | $ 400 | 700 | $ 700 | |
Estimated Fair Value | |||||
Securities with a loss less than 12 months | 14,602 | 14,602 | $ 17,026 | ||
Securities with a loss greater than 12 months | 639 | 639 | 653 | ||
Unrealized Losses | |||||
Securities with a loss less than 12 months | (157) | (157) | (180) | ||
Securities with a loss greater than 12 months | (131) | (131) | (160) | ||
Portion of securities with variable rate | $ 122,700 | ||||
CMBS | Fair value option | |||||
Unrealized Losses | |||||
Fair value of investment securities before consolidation of VIEs | 1,100,000 | 1,100,000 | |||
Unpaid principal balance of investment securities before consolidation of VIEs | 4,700,000 | 4,700,000 | |||
Purchases in which fair value option was elected | 54,800 | 101,300 | |||
Purchase amount reflected as repayment of debt of consolidated VIEs | 30,300 | 43,700 | |||
CMBS, fair value option | |||||
Unrealized Losses | |||||
Portion of securities with variable rate | $ 0 | $ 0 |
Investment Securities - HTM (De
Investment Securities - HTM (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | $ 520,342 | $ 321,244 |
Gross Unrealized Holdings Gains | 257 | |
Gross Unrealized Holdings Losses | (14,694) | (6,246) |
Fair Value | 505,648 | 315,255 |
HTM preferred equity interests | ||
Less than one year | 210,834 | |
One to three years | 106,112 | |
Three to five years | 183,765 | |
Thereafter | 19,631 | |
Total | 520,342 | 321,244 |
Preferred Equity Investment | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 19,631 | 19,386 |
Gross Unrealized Holdings Losses | (192) | (595) |
Fair Value | 19,439 | 18,791 |
HTM preferred equity interests | ||
Thereafter | 19,631 | |
Total | 19,631 | 19,386 |
CMBS | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 500,711 | 301,858 |
Gross Unrealized Holdings Gains | 257 | |
Gross Unrealized Holdings Losses | (14,502) | (5,651) |
Fair Value | 486,209 | 296,464 |
HTM preferred equity interests | ||
Less than one year | 210,834 | |
One to three years | 106,112 | |
Three to five years | 183,765 | |
Total | $ 500,711 | $ 301,858 |
Investment Securities - SEREF (
Investment Securities - SEREF (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2012 | Dec. 31, 2015 | |
Residential Real Estate | |||
Ownership percentage | 3.00% | ||
SEREF | |||
Residential Real Estate | |||
Number of shares acquired | 9,140,000 | ||
Fair value of investment | $ 12.9 | $ 14.5 |
Properties (Details)
Properties (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Properties | ||||||
(Loss) gain on sale of investments and other assets, net | $ (90) | $ 209 | $ 155 | $ 17,407 | ||
Summary of properties | ||||||
Total properties, at cost | 1,256,997 | 1,256,997 | $ 928,060 | |||
Less: accumulated depreciation | (24,142) | (24,142) | (8,835) | |||
Properties, net | 1,232,855 | 1,232,855 | 919,225 | |||
Property Segment | ||||||
Summary of properties | ||||||
Land | 324,616 | 324,616 | 247,589 | |||
Buildings | 686,214 | 686,214 | 516,117 | |||
Furniture & fixtures | 21,607 | $ 21,607 | 11,980 | |||
Property Segment | Minimum | ||||||
Summary of properties | ||||||
Building, useful life | 10 years | |||||
Land improvements, useful life | 0 years | |||||
Furniture & fixtures, useful life | 2 years | |||||
Property Segment | Maximum | ||||||
Summary of properties | ||||||
Building, useful life | 40 years | |||||
Land improvements, useful life | 10 years | |||||
Furniture & fixtures, useful life | 7 years | |||||
Investment and Servicing Segment | ||||||
Properties | ||||||
(Loss) gain on sale of investments and other assets, net | $ 17,100 | |||||
Summary of properties | ||||||
Land | 67,187 | $ 67,187 | 39,103 | |||
Buildings | 156,146 | 156,146 | 112,524 | |||
Furniture & fixtures | $ 1,227 | $ 1,227 | $ 747 | |||
Investment and Servicing Segment | Minimum | ||||||
Summary of properties | ||||||
Building, useful life | 10 years | |||||
Building improvements, useful life | 0 years | |||||
Furniture & fixtures, useful life | 3 years | |||||
Investment and Servicing Segment | Maximum | ||||||
Summary of properties | ||||||
Building, useful life | 40 years | |||||
Building improvements, useful life | 10 years | |||||
Furniture & fixtures, useful life | 7 years |
Investment in Unconsolidated 62
Investment in Unconsolidated Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 183,556 | $ 183,556 | $ 181,032 | ||
Cost method, Carrying value | 16,985 | 16,985 | 18,169 | ||
Investment in unconsolidated entities | 200,541 | 200,541 | $ 199,201 | ||
Income recognized | $ 4,479 | $ 8,951 | $ 8,544 | $ 15,041 | |
Retail fund | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 33.00% | 33.00% | 33.00% | ||
Equity method, Carrying value | $ 122,130 | $ 122,130 | $ 122,454 | ||
Investor entity which owns equity in two real estate services providers | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | ||
Equity method, Carrying value | $ 23,074 | $ 23,074 | $ 23,972 | ||
Equity interests in commercial real estate | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 31,912 | $ 31,912 | $ 28,230 | ||
Equity interests in commercial real estate | Partnership | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | |||
Equity method, Carrying value | $ 3,700 | $ 3,700 | |||
Purchase price | $ 19,000 | ||||
Equity interests in commercial real estate | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 16.00% | 16.00% | 16.00% | ||
Equity interests in commercial real estate | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | ||
Various - Equity method | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 6,440 | $ 6,440 | $ 6,376 | ||
Various - Equity method | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 25.00% | 25.00% | 25.00% | ||
Various - Equity method | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | ||
Investment funds which own equity in a loan servicer and other real estate assets | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Carrying value | $ 9,225 | $ 9,225 | $ 9,225 | ||
Investment funds which own equity in a loan servicer and other real estate assets | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 4.00% | 4.00% | 4.00% | ||
Investment funds which own equity in a loan servicer and other real estate assets | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 6.00% | 6.00% | 6.00% | ||
Various - Cost method | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Carrying value | $ 7,760 | $ 7,760 | $ 8,944 | ||
Various - Cost method | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 0.00% | 0.00% | 0.00% | ||
Various - Cost method | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 3.00% | 3.00% | 3.00% |
Goodwill and Intangible Asset63
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Summary of Intangible Assets | ||
Gross carrying value | $ 235,794 | $ 240,377 |
Accumulated amortization | (58,741) | (38,807) |
Net carrying value | 177,053 | 201,570 |
European servicing rights | ||
Summary of Intangible Assets | ||
Gross carrying value | 28,523 | 31,593 |
Accumulated amortization | (26,934) | (28,967) |
Net carrying value | 1,589 | 2,626 |
Fair value intangible assets | 4,400 | 5,300 |
In-place lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 106,263 | 74,983 |
Accumulated amortization | (29,707) | (8,898) |
Net carrying value | 76,556 | 66,085 |
Favorable lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 17,707 | 14,103 |
Accumulated amortization | (2,100) | (942) |
Net carrying value | 15,607 | 13,161 |
Domestic servicing rights | ||
Summary of Intangible Assets | ||
Gross carrying value | 83,301 | 119,698 |
Net carrying value | 83,301 | 119,698 |
Domestic servicing rights | Before consolidation of securitization VIEs | ||
Intangible Assets | ||
Servicing rights intangibles | 112,900 | 131,500 |
Domestic servicing rights | VIE eliminations | ||
Intangible Assets | ||
Servicing rights intangibles | $ 29,600 | $ 11,800 |
Goodwill and Intangible Asset64
Goodwill and Intangible Assets - Activity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Summary of activity within intangible assets | |
Balance as of beginning of period | $ 201,570 |
Impact of ASU 2015-02 Adoption | (17,467) |
Amortization | (22,706) |
Foreign exchange (loss) gain | 1,025 |
Changes in fair value due to changes in inputs and assumptions | (18,930) |
Balance as of end of period | 177,053 |
Future amortization expense for the European servicing rights, in-place lease intangible assets and favorable lease intangible assets | |
2016 (remainder of) | 12,048 |
2,017 | 16,855 |
2,018 | 14,788 |
2,019 | 10,278 |
2,020 | 7,635 |
Thereafter | 32,148 |
Total | 93,752 |
Woodstar Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 8,174 |
REO Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 25,387 |
European servicing rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 2,626 |
Amortization | (842) |
Foreign exchange (loss) gain | (195) |
Balance as of end of period | 1,589 |
In-place lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 66,085 |
Amortization | (20,721) |
Foreign exchange (loss) gain | 977 |
Balance as of end of period | 76,556 |
In-place lease | Woodstar Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 8,174 |
In-place lease | REO Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 22,041 |
Favorable lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 13,161 |
Amortization | (1,143) |
Foreign exchange (loss) gain | 243 |
Balance as of end of period | 15,607 |
Favorable lease | REO Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 3,346 |
Domestic servicing rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 119,698 |
Impact of ASU 2015-02 Adoption | (17,467) |
Changes in fair value due to changes in inputs and assumptions | (18,930) |
Balance as of end of period | $ 83,301 |
Secured Financing Agreements (D
Secured Financing Agreements (Details) $ in Thousands, € in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2016EUR (€)loanitem | May 31, 2016USD ($) | Jun. 30, 2016USD ($)item | Mar. 31, 2016USD ($)item | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Apr. 30, 2016USD ($) | Feb. 29, 2016USD ($) | Dec. 31, 2015USD ($) | |
Secured Financing Agreements | ||||||||||
Unamortized premium (discount), net | $ 1,414 | $ 1,414 | $ (1,702) | |||||||
Unamortized deferred financing costs | (32,588) | (32,588) | (38,336) | |||||||
Carrying Value | $ 4,476,221 | $ 4,476,221 | 3,980,699 | |||||||
Repayment of secured financings | ||||||||||
Percentage of repurchase agreements for which margin calls are limited to collateral specific credit marks | 62.00% | 62.00% | ||||||||
Percentage of repurchase agreements containing margin call provisions that pertain to loans held-for-sale | 33.00% | 33.00% | ||||||||
Lender 2 Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Maximum Facility Size | $ 600,000 | $ 500,000 | ||||||||
Amount of increase in available borrowings | 100,000 | |||||||||
Lender 4 Repo 2 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Maximum borrowing capacity | $ 600,000 | $ 600,000 | ||||||||
Maximum facility size subject to certain conditions | 1,000,000 | 1,000,000 | ||||||||
Maximum allowed for conduit loan financing | $ 200,000 | |||||||||
Lender 7 Secured Financing | ||||||||||
Secured Financing Agreements | ||||||||||
Maximum borrowing capacity | 450,000 | 450,000 | ||||||||
Maximum facility size subject to certain conditions | $ 650,000 | $ 650,000 | ||||||||
Floor interest rate (as a percent) | 75.00% | |||||||||
CMBS Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Maturity period | 11 months | |||||||||
CMBS Repo 2 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Number of first mortgage loans financed | loan | 1 | |||||||||
Number of first mortgage loan portfolios financed | item | 1 | |||||||||
Total amount of financing | € | € 124.1 | |||||||||
CMBS Repo 2 Facility | EURIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.00% | |||||||||
CMBS Repo 3 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Maturity period | 12 months | |||||||||
RMBS Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Maximum Facility Size | $ 185,000 | $ 125,000 | ||||||||
Maturity period | 270 days | |||||||||
Investing and Servicing Segment Property Mortgages | ||||||||||
Secured Financing Agreements | ||||||||||
Interest rate (as a percent) | 3.50% | 3.50% | ||||||||
Maximum Facility Size | $ 32,200 | $ 32,200 | ||||||||
Number of mortgage facilities executed | item | 4 | |||||||||
Investing and Servicing Segment Property Mortgages | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||
Investing and Servicing Segment Property Mortgages | Weighted-average | ||||||||||
Secured Financing Agreements | ||||||||||
Maturity period | 6 years 1 month 6 days | |||||||||
Woodstar Portfolio Mortgages | ||||||||||
Secured Financing Agreements | ||||||||||
Principal Amount | $ 18,600 | $ 18,600 | ||||||||
Number of mortgage facilities assumed | item | 2 | |||||||||
Repayment of secured financings | ||||||||||
Total | $ 18,600 | 18,600 | ||||||||
Woodstar Portfolio Government Financing | ||||||||||
Secured Financing Agreements | ||||||||||
Principal Amount | 129,200 | $ 2,500 | $ 129,200 | |||||||
Number of federal, state and county sponsored mortgage facilities assumed | item | 1 | 17 | ||||||||
Repayment of secured financings | ||||||||||
Total | 129,200 | $ 2,500 | $ 129,200 | |||||||
Secured financing agreements | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 8,719,135 | 8,719,135 | ||||||||
Maximum Facility Size | 6,989,601 | 6,989,601 | ||||||||
Principal Amount | 4,507,395 | 4,507,395 | 4,020,737 | |||||||
Repayment of secured financings | ||||||||||
2016 (remainder of) | 180,865 | 180,865 | ||||||||
2,017 | 858,000 | 858,000 | ||||||||
2,018 | 1,025,315 | 1,025,315 | ||||||||
2,019 | 636,657 | 636,657 | ||||||||
2,020 | 1,279,723 | 1,279,723 | ||||||||
Thereafter | 526,835 | 526,835 | ||||||||
Total | 4,507,395 | 4,507,395 | 4,020,737 | |||||||
Amortization of deferred financing costs from secured financing agreements included in interest expense | 4,300 | $ 3,500 | 8,200 | $ 7,000 | ||||||
Secured financing agreements | Lender 1 Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 2,179,007 | 2,179,007 | ||||||||
Maximum Facility Size | 1,600,000 | 1,600,000 | ||||||||
Principal Amount | 1,490,949 | 1,490,949 | 975,735 | |||||||
Repayment of secured financings | ||||||||||
Total | 1,490,949 | $ 1,490,949 | 975,735 | |||||||
Secured financing agreements | Lender 1 Repo 1 Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.85% | |||||||||
Secured financing agreements | Lender 1 Repo 1 Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 5.25% | |||||||||
Secured financing agreements | Lender 2 Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 300,368 | $ 300,368 | ||||||||
Maximum Facility Size | 500,000 | 500,000 | ||||||||
Principal Amount | 238,479 | 238,479 | 233,705 | |||||||
Repayment of secured financings | ||||||||||
Total | 238,479 | $ 238,479 | 233,705 | |||||||
Secured financing agreements | Lender 2 Repo 1 Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.75% | |||||||||
Secured financing agreements | Lender 2 Repo 1 Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||
Secured financing agreements | Lender 3 Repo I Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 112,022 | $ 112,022 | ||||||||
Maximum Facility Size | 79,325 | 79,325 | ||||||||
Principal Amount | 79,325 | 79,325 | 131,997 | |||||||
Repayment of secured financings | ||||||||||
Total | 79,325 | $ 79,325 | 131,997 | |||||||
Secured financing agreements | Lender 3 Repo I Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.50% | |||||||||
Secured financing agreements | Lender 3 Repo I Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.85% | |||||||||
Secured financing agreements | Lender 4 Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Principal Amount | 309,498 | |||||||||
Repayment of secured financings | ||||||||||
Total | 309,498 | |||||||||
Secured financing agreements | Lender 4 Repo 1 Facility | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.00% | |||||||||
Secured financing agreements | Lender 4 Repo 2 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 253,813 | $ 253,813 | ||||||||
Maximum Facility Size | 1,000,000 | 1,000,000 | ||||||||
Principal Amount | 164,940 | 164,940 | ||||||||
Repayment of secured financings | ||||||||||
2016 (remainder of) | 62,900 | 62,900 | ||||||||
Total | 164,940 | $ 164,940 | ||||||||
Secured financing agreements | Lender 4 Repo 2 Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.00% | |||||||||
Secured financing agreements | Lender 4 Repo 2 Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.50% | |||||||||
Secured financing agreements | Lender 6 Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 431,821 | $ 431,821 | ||||||||
Maximum Facility Size | 500,000 | 500,000 | ||||||||
Principal Amount | 288,149 | 288,149 | 491,263 | |||||||
Repayment of secured financings | ||||||||||
Total | 288,149 | $ 288,149 | 491,263 | |||||||
Secured financing agreements | Lender 6 Repo 1 Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.50% | |||||||||
Secured financing agreements | Lender 6 Repo 1 Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 3.00% | |||||||||
Secured financing agreements | Lender 7 Secured Financing | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 108,120 | $ 108,120 | ||||||||
Maximum Facility Size | 650,000 | $ 650,000 | ||||||||
Principal Amount | 38,055 | |||||||||
Repayment of secured financings | ||||||||||
Total | 38,055 | |||||||||
Secured financing agreements | Lender 7 Secured Financing | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||
Secured financing agreements | Conduit Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Principal Amount | 80,741 | |||||||||
Repayment of secured financings | ||||||||||
Total | 80,741 | |||||||||
Secured financing agreements | Conduit Repo 2 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 42,612 | $ 42,612 | ||||||||
Maximum Facility Size | 150,000 | 150,000 | ||||||||
Principal Amount | 31,594 | 31,594 | ||||||||
Repayment of secured financings | ||||||||||
Total | 31,594 | $ 31,594 | ||||||||
Secured financing agreements | Conduit Repo 2 Facility | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.10% | |||||||||
Secured financing agreements | Conduit Repo 3 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 9,096 | $ 9,096 | ||||||||
Maximum Facility Size | 150,000 | 150,000 | ||||||||
Principal Amount | 6,825 | 6,825 | 66,041 | |||||||
Repayment of secured financings | ||||||||||
Total | 6,825 | $ 6,825 | 66,041 | |||||||
Secured financing agreements | Conduit Repo 3 Facility | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.10% | |||||||||
Secured financing agreements | Conduit Repo 4 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 62,377 | $ 62,377 | ||||||||
Maximum Facility Size | 100,000 | 100,000 | ||||||||
Principal Amount | 46,612 | 46,612 | ||||||||
Repayment of secured financings | ||||||||||
2016 (remainder of) | 46,600 | 46,600 | ||||||||
Total | 46,612 | $ 46,612 | ||||||||
Secured financing agreements | Conduit Repo 4 Facility | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||
Secured financing agreements | CMBS Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 32,800 | $ 32,800 | ||||||||
Maximum Facility Size | 21,354 | 21,354 | ||||||||
Principal Amount | 21,354 | 21,354 | ||||||||
Repayment of secured financings | ||||||||||
Total | 21,354 | $ 21,354 | ||||||||
Secured financing agreements | CMBS Repo 1 Facility | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.90% | |||||||||
Secured financing agreements | CMBS Repo 2 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 339,132 | $ 339,132 | ||||||||
Maximum Facility Size | 247,192 | 247,192 | ||||||||
Principal Amount | 247,192 | 247,192 | 120,850 | |||||||
Repayment of secured financings | ||||||||||
Total | 247,192 | $ 247,192 | 120,850 | |||||||
Secured financing agreements | CMBS Repo 2 Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.00% | |||||||||
Secured financing agreements | CMBS Repo 2 Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.70% | |||||||||
Secured financing agreements | CMBS Repo 3 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 409,685 | $ 409,685 | ||||||||
Maximum Facility Size | 287,467 | 287,467 | ||||||||
Principal Amount | 287,467 | 287,467 | 243,434 | |||||||
Repayment of secured financings | ||||||||||
Total | 287,467 | $ 287,467 | 243,434 | |||||||
Secured financing agreements | CMBS Repo 3 Facility | Minimum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.40% | |||||||||
Secured financing agreements | CMBS Repo 3 Facility | Maximum | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.85% | |||||||||
Secured financing agreements | RMBS Repo 1 Facility | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 157,641 | $ 157,641 | ||||||||
Maximum Facility Size | 185,000 | 185,000 | ||||||||
Principal Amount | 91,144 | $ 91,144 | 2,000 | |||||||
Current maturity period, relative to when the buyer delivers notice to the seller | 270 days | |||||||||
Repayment of secured financings | ||||||||||
Total | 91,144 | $ 91,144 | 2,000 | |||||||
Secured financing agreements | RMBS Repo 1 Facility | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.90% | |||||||||
Secured financing agreements | Investing and Servicing Segment Property Mortgages | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 150,199 | $ 150,199 | ||||||||
Maximum Facility Size | 124,061 | 124,061 | ||||||||
Principal Amount | 118,163 | 118,163 | 82,964 | |||||||
Repayment of secured financings | ||||||||||
Total | 118,163 | 118,163 | 82,964 | |||||||
Secured financing agreements | Ireland Portfolio Mortgage | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 483,814 | 483,814 | ||||||||
Maximum Facility Size | 326,558 | 326,558 | ||||||||
Principal Amount | 326,558 | 326,558 | 319,322 | |||||||
Repayment of secured financings | ||||||||||
Total | 326,558 | $ 326,558 | 319,322 | |||||||
Secured financing agreements | Ireland Portfolio Mortgage | EURIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 1.69% | |||||||||
Secured financing agreements | Woodstar Portfolio Mortgages | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 380,690 | $ 380,690 | ||||||||
Maximum Facility Size | 267,114 | 267,114 | ||||||||
Principal Amount | 267,114 | 267,114 | 248,630 | |||||||
Repayment of secured financings | ||||||||||
Total | $ 267,114 | $ 267,114 | 248,630 | |||||||
Secured financing agreements | Woodstar Portfolio Mortgages | Minimum | ||||||||||
Secured Financing Agreements | ||||||||||
Interest rate (as a percent) | 3.72% | 3.72% | ||||||||
Secured financing agreements | Woodstar Portfolio Mortgages | Maximum | ||||||||||
Secured Financing Agreements | ||||||||||
Interest rate (as a percent) | 7.46% | 7.46% | ||||||||
Secured financing agreements | Woodstar Portfolio Mortgages | Weighted-average | ||||||||||
Secured Financing Agreements | ||||||||||
Interest rate (as a percent) | 3.99% | 3.99% | ||||||||
Secured financing agreements | Woodstar Portfolio Government Financing | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | $ 318,501 | $ 318,501 | ||||||||
Maximum Facility Size | 137,394 | 137,394 | ||||||||
Principal Amount | 137,394 | 137,394 | 8,982 | |||||||
Repayment of secured financings | ||||||||||
Total | $ 137,394 | $ 137,394 | 8,982 | |||||||
Secured financing agreements | Woodstar Portfolio Government Financing | Minimum | ||||||||||
Secured Financing Agreements | ||||||||||
Interest rate (as a percent) | 1.00% | 1.00% | ||||||||
Secured financing agreements | Woodstar Portfolio Government Financing | Maximum | ||||||||||
Secured Financing Agreements | ||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | ||||||||
Secured financing agreements | Term Loan | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | $ 2,937,230 | $ 2,937,230 | ||||||||
Maximum Facility Size | 654,886 | 654,886 | ||||||||
Principal Amount | 654,886 | 654,886 | 658,270 | |||||||
Repayment of secured financings | ||||||||||
Total | 654,886 | $ 654,886 | 658,270 | |||||||
Secured financing agreements | Term Loan | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||
Secured financing agreements | FHLB Advances | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 10,207 | $ 10,207 | ||||||||
Maximum Facility Size | 9,250 | 9,250 | ||||||||
Principal Amount | 9,250 | 9,250 | 9,250 | |||||||
Repayment of secured financings | ||||||||||
Total | 9,250 | $ 9,250 | 9,250 | |||||||
Secured financing agreements | FHLB Advances | LIBOR | ||||||||||
Secured Financing Agreements | ||||||||||
Pricing margin (as a percent) | 0.37% | |||||||||
Repurchase Agreements | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 2,994,030 | $ 2,994,030 | 2,655,264 | |||||||
Principal Amount | 2,994,030 | 2,994,030 | ||||||||
Repayment of secured financings | ||||||||||
2016 (remainder of) | 166,552 | 166,552 | ||||||||
2,017 | 827,610 | 827,610 | ||||||||
2,018 | 994,507 | 994,507 | ||||||||
2,019 | 617,347 | 617,347 | ||||||||
2,020 | 308,421 | 308,421 | ||||||||
Thereafter | 79,593 | 79,593 | ||||||||
Total | 2,994,030 | 2,994,030 | ||||||||
Repurchase Agreements | Loan held for investment | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 2,198,902 | 2,198,902 | 2,142,198 | |||||||
Repurchase Agreements | Loans held-for-sale | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 147,971 | 147,971 | 146,782 | |||||||
Repurchase Agreements | Investment securities. | ||||||||||
Secured Financing Agreements | ||||||||||
Pledged Asset Carrying Value | 647,157 | 647,157 | $ 366,284 | |||||||
Other Secured Financing | ||||||||||
Secured Financing Agreements | ||||||||||
Principal Amount | 1,513,365 | 1,513,365 | ||||||||
Repayment of secured financings | ||||||||||
2016 (remainder of) | 14,313 | 14,313 | ||||||||
2,017 | 30,390 | 30,390 | ||||||||
2,018 | 30,808 | 30,808 | ||||||||
2,019 | 19,310 | 19,310 | ||||||||
2,020 | 971,302 | 971,302 | ||||||||
Thereafter | 447,242 | 447,242 | ||||||||
Total | $ 1,513,365 | $ 1,513,365 |
Convertible Senior Notes (Detai
Convertible Senior Notes (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($)shares | Jun. 30, 2016USD ($)item$ / sharesshares | Jun. 30, 2015USD ($)shares | Dec. 31, 2015USD ($) | Oct. 08, 2014USD ($) | Jul. 03, 2013USD ($) | Feb. 15, 2013USD ($) | |
Convertible Senior Notes | ||||||||
Interest expense | $ 57,635,000 | $ 49,799,000 | $ 114,155,000 | $ 100,333,000 | ||||
Unamortized deferred financing costs | $ (32,588,000) | $ (32,588,000) | $ (38,336,000) | |||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | (17,727,000) | |||||||
Loss on extinguishment of debt | $ 629,000 | $ 5,921,000 | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 441 | 649 | 456 | 644 | ||||
Deferred financing costs, net of amortization | $ 32,588,000 | $ 32,588,000 | 38,336,000 | |||||
Conversion upon satisfaction of closing market price condition | ||||||||
Convertible Senior Notes | ||||||||
Minimum number of conditions to be satisfied for conversion of debt | item | 1 | |||||||
Minimum trading period as a basis for debt conversion | 20 days | |||||||
Consecutive trading period as a basis for debt conversion | 30 days | |||||||
Conversion upon satisfaction of closing market price condition | Minimum | ||||||||
Convertible Senior Notes | ||||||||
Percentage of per share value of distributions that exceeds the market price of the entity's common stock as a basis for debt conversion | 10.00% | |||||||
Conversion upon satisfaction of closing market price condition | Maximum | ||||||||
Convertible Senior Notes | ||||||||
Period of average closing market price of common stock as a basis for debt conversion | 10 days | |||||||
Conversion upon satisfaction of trading price condition | ||||||||
Convertible Senior Notes | ||||||||
Consecutive trading period as a basis for debt conversion | 5 days | |||||||
Conversion upon satisfaction of trading price condition | Maximum | ||||||||
Convertible Senior Notes | ||||||||
Percentage of conversion price and last reported sales price as a basis for debt conversion | 98.00% | |||||||
2017 Notes | ||||||||
Convertible Senior Notes | ||||||||
Amount issued | $ 431,300,000 | |||||||
Principal Amount | $ 431,250,000 | $ 431,250,000 | ||||||
Coupon Rate (as a percent) | 3.75% | 3.75% | 3.75% | |||||
Effective Rate (as a percent) | 5.87% | 5.87% | ||||||
Conversion Rate | 41.7397 | |||||||
Remaining Period of Amortization | 1 year 3 months 18 days | |||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 58,300,000 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 23.96 | $ 23.96 | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 0 | 0 | ||||||
2017 Notes | Conversion upon satisfaction of closing market price condition | Minimum | ||||||||
Convertible Senior Notes | ||||||||
Percentage of conversion price as a basis for debt conversion | 110.00% | |||||||
2018 Notes | ||||||||
Convertible Senior Notes | ||||||||
Amount issued | $ 600,000,000 | |||||||
Principal Amount | $ 599,981,000 | $ 599,981,000 | ||||||
Coupon Rate (as a percent) | 4.55% | 4.55% | 4.55% | |||||
Effective Rate (as a percent) | 6.10% | 6.10% | ||||||
Conversion Rate | 46.7513 | |||||||
Remaining Period of Amortization | 1 year 8 months 12 days | |||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 18,800,000 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 21.39 | $ 21.39 | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 0 | 0 | ||||||
2019 Notes | ||||||||
Convertible Senior Notes | ||||||||
Amount issued | $ 460,000,000 | |||||||
Principal Amount | $ 341,363,000 | $ 341,363,000 | ||||||
Coupon Rate (as a percent) | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | |||
Effective Rate (as a percent) | 5.35% | 5.35% | ||||||
Conversion Rate | 49.4927 | |||||||
Remaining Period of Amortization | 2 years 6 months | |||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 8,800,000 | |||||||
Closing share price (in dollars per share) | $ / shares | $ 20.72 | $ 20.72 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 20.20 | $ 20.20 | ||||||
Aggregate principal amount of debt repurchased | $ 14,500,000 | $ 118,600,000 | ||||||
Amount paid for debt repurchased | 16,500,000 | 136,300,000 | ||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | 17,700,000 | |||||||
Repurchase expenses | 100,000 | |||||||
Loss on extinguishment of debt | $ 600,000 | $ 5,900,000 | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 400 | 500 | ||||||
2018 Notes and 2019 Notes | Conversion upon satisfaction of closing market price condition | Minimum | ||||||||
Convertible Senior Notes | ||||||||
Percentage of conversion price as a basis for debt conversion | 130.00% | |||||||
Convertible Senior Notes | ||||||||
Convertible Senior Notes | ||||||||
Principal Amount | $ 1,372,594,000 | $ 1,372,594,000 | 1,372,594,000 | |||||
Unamortized discount | (37,055,000) | (37,055,000) | (47,351,000) | |||||
Unamortized deferred financing costs | (1,115,000) | (1,115,000) | (1,448,000) | |||||
Carrying amount of debt components | 1,334,424,000 | 1,334,424,000 | 1,323,795,000 | |||||
Carrying amount of conversion option equity components recorded in additional paid-in capital | $ 46,343,000 | $ 46,343,000 | 46,343,000 | |||||
Principal amount of notes, basis for conversion | 1,000 | |||||||
Closing share price (in dollars per share) | $ / shares | $ 20.72 | $ 20.72 | ||||||
Conversion of principal not included in computation of diluted EPS (in shares | shares | 62,500 | |||||||
Deferred financing costs, net of amortization | $ 1,115,000 | $ 1,115,000 | $ 1,448,000 | |||||
Convertible Senior Notes | 2019 Notes | ||||||||
Convertible Senior Notes | ||||||||
Amount by which if-converted value of the Notes exceed principal amount | $ 8,800,000 |
Loan Securitization_Sale Acti67
Loan Securitization/Sale Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Loan Transfers Accounted for as Secured Borrowings | ||||
Face Amount | $ 38,925 | $ 38,925 | ||
Proceeds | 38,925 | 38,925 | ||
Investment and Servicing Segment | ||||
Loan Transfer Activities | ||||
Fair value of loans sold | $ 218,369 | 551,635 | $ 475,333 | 1,033,644 |
Par value of loans sold | 204,960 | 533,447 | 456,862 | 998,021 |
Repayment of purchase agreements | 153,574 | 400,078 | 342,781 | 744,456 |
Repurchase agreements | Lending Segment | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 23,977 | 295,961 | 122,514 | 381,461 |
Proceeds | $ 23,394 | $ 293,455 | $ 121,276 | $ 378,576 |
Derivatives and Hedging Activ68
Derivatives and Hedging Activity - Designated and Non-Designated Hedges (Details) - 6 months ended Jun. 30, 2016 € in Thousands, £ in Thousands, SEK in Thousands, NOK in Thousands, DKK in Thousands, $ in Thousands | NOKinstrumentitem | GBP (£)instrumentitem | SEKinstrumentitem | DKKinstrumentitem | EUR (€)instrumentitem | USD ($)instrumentitem |
Derivatives | ||||||
Number of contracts | 258 | 258 | 258 | 258 | 258 | 258 |
Foreign exchange contracts | GBP | Sell | ||||||
Derivatives | ||||||
Number of contracts | 81 | 81 | 81 | 81 | 81 | 81 |
Aggregate notional amount | £ | £ 150,831 | |||||
Foreign exchange contracts | EUR | Buy | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | € | € 94 | |||||
Foreign exchange contracts | EUR | Sell | ||||||
Derivatives | ||||||
Number of contracts | 93 | 93 | 93 | 93 | 93 | 93 |
Aggregate notional amount | € | € 364,047 | |||||
Foreign exchange contracts | EUR | Sell | Ireland Portfolio | ||||||
Derivatives | ||||||
Number of contracts | 49 | 49 | 49 | 49 | 49 | 49 |
Aggregate notional amount | € | € 246,900 | |||||
Foreign exchange contracts | SEK | Buy | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | SEK | SEK 1,321 | |||||
Foreign exchange contracts | NOK | Buy | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | NOK | NOK 15 | |||||
Foreign exchange contracts | NOK | Sell | ||||||
Derivatives | ||||||
Number of contracts | 1 | 1 | 1 | 1 | 1 | 1 |
Aggregate notional amount | NOK | NOK 878 | |||||
Foreign exchange contracts | DKK | Buy | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | DKK | DKK 137 | |||||
Foreign exchange contracts | DKK | Sell | ||||||
Derivatives | ||||||
Number of contracts | 1 | 1 | 1 | 1 | 1 | 1 |
Aggregate notional amount | SEK 7,032 | DKK 6,251 | ||||
Interest rate swaps | Paying fixed rates | ||||||
Derivatives | ||||||
Number of contracts | 56 | 56 | 56 | 56 | 56 | 56 |
Aggregate notional amount | $ | $ 370,206 | |||||
Interest rate swaps | Receiving fixed rates | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | $ | $ 9,800 | |||||
Interest rate swaps | Derivatives designated as hedging instruments | ||||||
Derivatives | ||||||
Number of contracts | instrument | 6 | 6 | 6 | 6 | 6 | 6 |
Aggregate notional amount | $ | $ 66,400 | |||||
Fixed monthly coupons at fixed rate, low end of range (as a percent) | 0.60% | 0.60% | 0.60% | 0.60% | 0.60% | 0.60% |
Fixed monthly coupons at fixed rate, high end of range (as a percent) | 1.52% | 1.52% | 1.52% | 1.52% | 1.52% | 1.52% |
Amount expected to be reclassified from other comprehensive income to interest expense over the next twelve months | $ | $ 300 | |||||
Hedging period for covering exposure to the variability in future cash flows | 59 months | |||||
Interest rate caps | EUR | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | € | € 294,000 | |||||
Interest rate caps | USD | ||||||
Derivatives | ||||||
Number of contracts | 4 | 4 | 4 | 4 | 4 | 4 |
Aggregate notional amount | $ | $ 34,474 | |||||
Credit index instruments | ||||||
Derivatives | ||||||
Number of contracts | 9 | 9 | 9 | 9 | 9 | 9 |
Aggregate notional amount | $ | $ 36,000 |
Derivatives and Hedging Activ69
Derivatives and Hedging Activity - Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 42,692 | $ 45,091 |
Fair Value of Derivatives in a Liability Position | 17,870 | 5,196 |
Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 57 | |
Fair Value of Derivatives in a Liability Position | 386 | 122 |
Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 42,692 | 45,034 |
Fair Value of Derivatives in a Liability Position | 17,484 | 5,074 |
Interest rate swaps | Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 57 | |
Fair Value of Derivatives in a Liability Position | 386 | 122 |
Interest rate swaps | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 967 | 2,360 |
Fair Value of Derivatives in a Liability Position | 17,160 | 4,970 |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 39,399 | 41,137 |
Fair Value of Derivatives in a Liability Position | 324 | 104 |
Credit index instruments | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 2,326 | $ 1,537 |
Derivatives and Hedging Activ70
Derivatives and Hedging Activity - Effect on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | $ 20,253 | $ (19,530) | $ (4,465) | $ 5,093 |
Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 20,253 | (19,530) | (4,465) | 5,093 |
Interest rate swaps | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | (7,273) | 7,958 | (25,273) | (4,964) |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 27,899 | (27,799) | 21,349 | 10,172 |
Credit index instruments | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | (373) | 311 | (541) | (115) |
Cash flow hedges | Interest rate swaps | Derivatives designated as hedging instruments | ||||
Derivatives | ||||
Gain (Loss) Recognized in OCI (effective portion) | (136) | (71) | (504) | (538) |
Gain (Loss) Reclassified from AOCI into Income (effective portion) | $ (88) | $ (194) | $ (183) | $ (398) |
Offsetting Assets and Liabili71
Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Net Amounts of Assets Presented in the Statement of Financial Position | $ 42,692 | $ 45,091 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 3,011,900 | 2,660,460 |
Net Amounts of Liabilities Presented in the Statement of Financial | 3,011,900 | 2,660,460 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 2,994,810 | 2,655,507 |
Cash Collateral Pledged | 17,090 | 4,953 |
Derivatives | ||
Assets | ||
Gross Amounts of Recognized Assets | 42,692 | 45,091 |
Net Amounts of Assets Presented in the Statement of Financial Position | 42,692 | 45,091 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 780 | 243 |
Net Amount | 41,912 | 44,848 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 17,870 | 5,196 |
Net Amounts of Liabilities Presented in the Statement of Financial | 17,870 | 5,196 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 780 | 243 |
Cash Collateral Pledged | 17,090 | 4,953 |
Repurchase agreements | ||
Liabilities | ||
Gross Amounts of Recognized Liabilities | 2,994,030 | 2,655,264 |
Net Amounts of Liabilities Presented in the Statement of Financial | 2,994,030 | 2,655,264 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 2,994,030 | $ 2,655,264 |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2016USD ($)trust | Jun. 30, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Variable interest entities | |||
VIE Assets | $ 80,076,117 | $ 76,675,689 | |
VIE Liabilities | 79,087,142 | 75,817,014 | |
Investment securities | 898,803 | 724,947 | |
Interest in VIE | 200,541 | $ 199,201 | |
Primary beneficiary | |||
Variable interest entities | |||
VIE Assets | 140,200 | ||
VIE Liabilities | $ 62,200 | ||
Primary beneficiary | Accounting Standards Update 2015-02 | Adjustment | |||
Variable interest entities | |||
Number of VIE's | trust | 14 | ||
VIE Assets | $ 15,100,000 | ||
VIE Liabilities | 15,100,000 | ||
Not primary beneficiary | |||
Variable interest entities | |||
Number of CDO structures currently in default | item | 1 | ||
Maximum risk of loss related to VIEs, on fair value basis | $ 114,300 | ||
Not primary beneficiary | Accounting Standards Update 2015-02 | Adjustment | |||
Variable interest entities | |||
Maximum risk of loss related to VIEs, on fair value basis | 131,400 | ||
Interest in VIE | 131,400 | ||
Commitments on loss | 29,200 | ||
Not primary beneficiary | Securitization SPEs | |||
Variable interest entities | |||
Debt obligations to beneficial interest holders, unpaid principal balances | $ 21,800,000 | ||
CMBS | Primary beneficiary | Accounting Standards Update 2015-02 | Adjustment | |||
Variable interest entities | |||
Investment securities | $ 120,900 |
Related-Party Transactions - Ma
Related-Party Transactions - Management Agreement and Manager Equity Plan (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
May 31, 2015 | Jan. 31, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Related-Party Transactions | |||||||
Granted (in shares) | 433,790 | ||||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||||
Related-Party Transactions | |||||||
Granted (in shares) | 675,000 | 2,000,000 | |||||
Award vesting period | 3 years | 3 years | |||||
Manager | |||||||
Related-Party Transactions | |||||||
Base management fee incurred | $ 15.1 | $ 14.9 | $ 30.2 | $ 28.8 | |||
Base management fee payable | 15.1 | 15.1 | $ 15.2 | ||||
Incentive fee incurred | 2.9 | 4.1 | 7.5 | 10.8 | |||
Incentive fees payable | 2.9 | 2.9 | 21.8 | ||||
Executive compensation and other reimbursable expenses | 1.5 | $ 1.5 | 2.6 | $ 2.9 | |||
Executive compensation and other reimbursable expense payable | $ 1.9 | $ 1.9 | $ 3.6 | ||||
Manager | Restricted stock | |||||||
Related-Party Transactions | |||||||
Granted (in shares) | 0 | 41,539 | 169,104 | 78,119 | |||
Grant date fair value | $ 1 | $ 3.3 | $ 1.9 | ||||
Award vesting period | 3 years | 3 years | |||||
Share-based compensation expense | $ 0.6 | 0.3 | $ 1 | $ 0.3 | |||
Manager | Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||||
Related-Party Transactions | |||||||
Granted (in shares) | 675,000 | ||||||
Share-based compensation expense | $ 5.3 | $ 7.4 | $ 10.1 | $ 14.3 |
Related-Party Transactions - In
Related-Party Transactions - Investments in Loans and Securities and Other Arrangements (Details) $ in Thousands, £ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2016GBP (£) | Jan. 31, 2016USD ($) | Jun. 30, 2016USD ($)property | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)property | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2013USD ($)item | Dec. 31, 2012shares | |
Related-Party Transactions | |||||||||
Spread on interest rate basis (as a percent) | 5.90% | 5.90% | |||||||
Originations of mortgage financing | $ 1,492,845 | $ 2,150,080 | |||||||
Purchase price of notes | $ 997,421 | 1,256,784 | |||||||
Ownership percentage | 3.00% | ||||||||
Equity method, Carrying value | $ 183,556 | $ 183,556 | $ 181,032 | ||||||
Distribution of capital from unconsolidated entities | 1,244 | 22,127 | |||||||
Earnings from unconsolidated entities | 4,479 | $ 8,951 | 8,544 | 15,041 | |||||
Interest in VIE | $ 200,541 | 200,541 | 199,201 | ||||||
Contribution | $ 10,417 | ||||||||
CMBS | |||||||||
Related-Party Transactions | |||||||||
Payments to acquire security | $ 9,700 | $ 84,100 | |||||||
Number of regional malls by which investment is secured | item | 5 | ||||||||
Co-origination of loan with SEREF and private funds, London | |||||||||
Related-Party Transactions | |||||||||
Number of properties | property | 3 | 3 | |||||||
Originations of mortgage financing | £ | £ 75 | ||||||||
Loans funded by the reporting entity | £ | 60 | ||||||||
SEREF | |||||||||
Related-Party Transactions | |||||||||
Number of shares acquired | shares | 9,140,000 | ||||||||
Retail fund | |||||||||
Related-Party Transactions | |||||||||
Equity method, Carrying value | $ 122,130 | $ 122,130 | $ 122,454 | ||||||
Equity interest acquired (as a percent) | 33.00% | 33.00% | 33.00% | ||||||
REO Portfolio | Investment and Servicing Segment | |||||||||
Related-Party Transactions | |||||||||
Purchase price | $ 58,000 | $ 87,800 | $ 138,700 | ||||||
Purchase price of properties - non-performing loans | 8,200 | 8,200 | |||||||
Purchase price of properties - performing loans | 9,700 | ||||||||
REO Portfolio | Investment and Servicing Segment | CMBS | |||||||||
Related-Party Transactions | |||||||||
Purchase price | 60,500 | 33,200 | 85,100 | 33,200 | |||||
Non-controlling interest assumed through LNR acquisition | $ 2,400 | $ 2,100 | $ 5,500 | $ 2,100 | |||||
REO Portfolio | Investment and Servicing Segment | Joint venture | CMBS | |||||||||
Related-Party Transactions | |||||||||
Equity interest acquired (as a percent) | 50.00% | 50.00% | |||||||
Purchase price | $ 19,000 | ||||||||
SEREF | Co-origination of loan with SEREF and private funds, London | |||||||||
Related-Party Transactions | |||||||||
Loans funded by the related party | £ | £ 15 | ||||||||
Fund Participants | REO Portfolio | |||||||||
Related-Party Transactions | |||||||||
Aggregate commitment | $ 15,000 | ||||||||
Equity interest in REO properties acquired after January 1, 2015 (as percent) | 10.00% | 10.00% | |||||||
Maximum expected capital contribution | $ 4,900 | ||||||||
Incremental percentage to earn on all operating cash flows attributable to capital account, net | 60.00% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 04, 2016 | May 09, 2016 | Feb. 25, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Stockholders' Equity | |||||||
Dividend declared (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 | |
Gross proceeds from issuance of common stock | $ 177 | $ 326,296 | |||||
Authorized amount of share repurchases | $ 500,000 | $ 500,000 | |||||
Common stock repurchased (in shares) | 1,052,889 | ||||||
Cost of common stock repurchased | $ 19,723 | 8,829 | |||||
Remaining capacity under repurchase program | $ 282,100 | $ 282,100 | |||||
Shares issued under ATM Agreement | 0 | ||||||
Underwriting and offering costs | $ 892 | ||||||
Subsequent Events | |||||||
Stockholders' Equity | |||||||
Dividend declared (in dollars per share) | $ 0.48 |
Stockholders' Equity - Equity I
Stockholders' Equity - Equity Incentive Plans (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
May 31, 2015 | Jan. 31, 2014 | Jun. 30, 2016 | |
Equity Incentive Plans | |||
Awards granted (in shares) | 433,790 | ||
Starwood Property Trust, Inc. Equity Plan and Manager Equity Plan | |||
Equity Incentive Plans | |||
Number of shares available for future grants | 2,300,000 | ||
Starwood Property Trust, Inc. Equity Plan | |||
Equity Incentive Plans | |||
Awards granted (in shares) | 430,014 | ||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||
Equity Incentive Plans | |||
Awards granted (in shares) | 675,000 | 2,000,000 | |
Awards granted, fair value | $ 16,511,000 | $ 55,420,000 | |
Award vesting period | 3 years | 3 years | |
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | Spin off | |||
Equity Incentive Plans | |||
Awards granted (in shares) | 489,281 | ||
Awards granted, fair value | $ 14,776,000 | ||
Award vesting period | 3 years | ||
Starwood Property Trust, Inc. Non-Executive Director Stock Plan | |||
Equity Incentive Plans | |||
Awards granted (in shares) | 3,776 |
Stockholders' Equity - Non-Vest
Stockholders' Equity - Non-Vested Shares (Details) | 6 Months Ended |
Jun. 30, 2016$ / sharesshares | |
Non-Vested Shares and Share Equivalents activity | |
Beginning Balance (in shares) | 1,868,216 |
Granted (in shares) | 433,790 |
Vested (in shares) | (772,220) |
Forfeited (in shares) | (21,796) |
Balance at the end of period (in shares) | 1,507,990 |
Weighted Average Grant Date Fair Value (per share) | |
Balance at the beginning of period (in dollars per share) | $ / shares | $ 25.84 |
Granted (in dollars per share) | $ / shares | 18.96 |
Vested (in dollars per share) | $ / shares | 26.08 |
Forfeited (in dollars per share) | $ / shares | 23.45 |
Balance at the end of period (in dollars per share) | $ / shares | $ 23.77 |
Starwood Property Trust, Inc. Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Beginning Balance (in shares) | 548,378 |
Granted (in shares) | 430,014 |
Vested (in shares) | (261,420) |
Forfeited (in shares) | (21,796) |
Balance at the end of period (in shares) | 695,176 |
Starwood Property Trust, Inc. Manager Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Beginning Balance (in shares) | 1,302,850 |
Vested (in shares) | (510,800) |
Balance at the end of period (in shares) | 792,050 |
Starwood Property Trust, Inc. Non-Executive Director Stock Plan | |
Non-Vested Shares and Share Equivalents activity | |
Beginning Balance (in shares) | 16,988 |
Granted (in shares) | 3,776 |
Balance at the end of period (in shares) | 20,764 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Continuing Operations: | ||||
Net income attributable to Starwood Property Trust, Inc. | $ 111,473 | $ 117,148 | $ 138,130 | $ 237,511 |
Less: Income attributable to participating shares | (580) | (1,207) | (1,287) | (2,183) |
Basic earnings | 110,893 | 115,941 | 136,843 | 235,328 |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | 111,473 | 117,148 | 138,130 | 237,511 |
Less: Income attributable to participating shares | (580) | (1,207) | (1,287) | (2,183) |
Add: Undistributed earnings to participating shares | 15 | 126 | ||
Less: Undistributed earnings reallocated to participating shares | (15) | (126) | ||
Diluted earnings | $ 110,893 | $ 115,941 | $ 136,843 | $ 235,328 |
Number of Shares: | ||||
Basic - Average shares outstanding | 237,060 | 235,087 | 236,808 | 229,346 |
Effect of dilutive securities - Convertible Notes (in shares) | 441 | 649 | 456 | 644 |
Effect of dilutive securities - Contingently Issuable Shares (in shares) | 70 | 95 | 70 | 95 |
Effect of dilutive securities — Unvested non-participating shares | 26 | 33 | ||
Weighted Average Number of Shares Outstanding, Diluted, Total | 237,597 | 235,831 | 237,367 | 230,085 |
Basic: | ||||
Basic (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.58 | $ 1.03 |
Diluted: | ||||
Diluted (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.58 | $ 1.02 |
Earnings per Share - Dilutive a
Earnings per Share - Dilutive and Antidilutive securities (Details) shares in Thousands, instrument in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016shares | Jun. 30, 2015shares | Jun. 30, 2016USD ($)instrumentshares | Jun. 30, 2015shares | |
Antidilutive securities and effect of dilutive securities | ||||
Effect of dilutive securities - Convertible Notes (in shares) | 441 | 649 | 456 | 644 |
2017 Notes | ||||
Antidilutive securities and effect of dilutive securities | ||||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 58.3 | |||
Effect of dilutive securities - Convertible Notes (in shares) | 0 | 0 | ||
2018 Notes | ||||
Antidilutive securities and effect of dilutive securities | ||||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 18.8 | |||
Effect of dilutive securities - Convertible Notes (in shares) | 0 | 0 | ||
2019 Notes | ||||
Antidilutive securities and effect of dilutive securities | ||||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 8.8 | |||
Effect of dilutive securities - Convertible Notes (in shares) | 400 | 500 | ||
Convertible Senior Notes | ||||
Antidilutive securities and effect of dilutive securities | ||||
Potential shares of common stock contingently issuable upon conversion of the Convertible Notes | instrument | 62.9 | |||
Shares excluded from diluted EPS calculations | 62,500 | |||
Convertible Senior Notes | 2019 Notes | ||||
Antidilutive securities and effect of dilutive securities | ||||
Amount by which if-converted value of the Notes exceed principal amount | $ | $ 8.8 | |||
Restricted stock | ||||
Antidilutive securities and effect of dilutive securities | ||||
Number of anti-dilutive common shares excluded from the calculation of diluted income per share | 1,200 | 2,500 |
Accumulated Other Comprehensi80
Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Changes in AOCI by component | ||||
Beginning balance | $ 33,457 | $ 39,362 | $ 29,729 | $ 55,896 |
OCI before reclassifications | (918) | 6,345 | 2,715 | (4,997) |
Amounts reclassified from AOCI | 88 | 194 | 183 | (4,998) |
Net period OCI | (830) | 6,539 | 2,898 | (9,995) |
Ending balance | 32,627 | 45,901 | 32,627 | 45,901 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | ||||
Changes in AOCI by component | ||||
Beginning balance | (338) | (360) | (65) | (97) |
OCI before reclassifications | (136) | (71) | (504) | (538) |
Amounts reclassified from AOCI | 88 | 194 | 183 | 398 |
Net period OCI | (48) | 123 | (321) | (140) |
Ending balance | (386) | (237) | (386) | (237) |
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | ||||
Changes in AOCI by component | ||||
Beginning balance | 33,907 | 52,227 | 37,307 | 60,190 |
OCI before reclassifications | 5,951 | (1,857) | 2,551 | (4,424) |
Amounts reclassified from AOCI | (5,396) | |||
Net period OCI | 5,951 | (1,857) | 2,551 | (9,820) |
Ending balance | 39,858 | 50,370 | 39,858 | 50,370 |
Foreign Currency Translation | ||||
Changes in AOCI by component | ||||
Beginning balance | (112) | (12,505) | (7,513) | (4,197) |
OCI before reclassifications | (6,733) | 8,273 | 668 | (35) |
Net period OCI | (6,733) | 8,273 | 668 | (35) |
Ending balance | $ (6,845) | $ (4,232) | $ (6,845) | $ (4,232) |
Accumulated Other Comprehensi81
Accumulated Other Comprehensive Income - Impact of Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Accumulated Other Comprehensive Income | ||||
Interest expense | $ (57,635) | $ (49,799) | $ (114,155) | $ (100,333) |
Interest income from investment securities | 15,301 | 23,810 | 34,704 | 51,554 |
Net income | 112,071 | 117,640 | 139,117 | 238,419 |
Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Net income | (88) | (194) | (183) | 4,998 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | Interest rate contracts | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest expense | $ (88) | $ (194) | $ (183) | (398) |
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest income from investment securities | $ 5,396 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets and liabilities measured at fair value | ||
Marketable securities | $ 898,803 | $ 724,947 |
Domestic servicing rights | 83,301 | 119,698 |
Derivative assets | 42,692 | 45,091 |
VIE Assets | 80,076,117 | 76,675,689 |
Derivative liabilities | 17,870 | 5,196 |
VIE Liabilities | 79,087,142 | 75,817,014 |
Fair value measurements on recurring basis | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 237,106 | 203,865 |
Derivative assets | 42,692 | 45,091 |
VIE Assets | 80,076,117 | 76,675,689 |
Total | 80,817,677 | 77,448,046 |
Derivative liabilities | 17,870 | 5,196 |
VIE Liabilities | 79,087,142 | 75,817,014 |
Total | 79,105,012 | 75,822,210 |
Fair value measurements on recurring basis | Domestic servicing rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 83,301 | 119,698 |
Fair value measurements on recurring basis | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 251,260 | 176,224 |
Fair value measurements on recurring basis | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 114,340 | 212,981 |
Fair value measurements on recurring basis | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 12,861 | 14,498 |
Fair value measurements on recurring basis | Level I | ||
Assets and liabilities measured at fair value | ||
Total | 12,861 | 14,498 |
Fair value measurements on recurring basis | Level I | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 12,861 | 14,498 |
Fair value measurements on recurring basis | Level II | ||
Assets and liabilities measured at fair value | ||
Derivative assets | 42,692 | 45,091 |
Total | 42,692 | 45,091 |
Derivative liabilities | 17,870 | 5,196 |
VIE Liabilities | 75,546,490 | 73,264,566 |
Total | 75,564,360 | 73,269,762 |
Fair value measurements on recurring basis | Level III | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 237,106 | 203,865 |
VIE Assets | 80,076,117 | 76,675,689 |
Total | 80,762,124 | 77,388,457 |
VIE Liabilities | 3,540,652 | 2,552,448 |
Total | 3,540,652 | 2,552,448 |
Fair value measurements on recurring basis | Level III | Domestic servicing rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 83,301 | 119,698 |
Fair value measurements on recurring basis | Level III | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 251,260 | 176,224 |
Fair value measurements on recurring basis | Level III | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | $ 114,340 | $ 212,981 |
Fair Value - Level III (Details
Fair Value - Level III (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Net accretion | $ 7,349 | $ 16,314 | ||
Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | $ 82,634,467 | $ 102,198,631 | 74,836,009 | 103,988,001 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (4,190,909) | (7,925,355) | (8,043,168) | (14,293,110) |
Included in earnings: Net accretion | 3,742 | 4,042 | 7,157 | 13,487 |
Included in OCI | 5,951 | 3,869 | 2,551 | (8,974) |
Purchases / Originations | 359,455 | 476,949 | 634,668 | 898,907 |
Sales | (219,638) | (552,019) | (476,602) | (1,038,742) |
Cash repayments / receipts | (8,588) | 19,610 | (21,989) | 55,646 |
Consolidations of VIEs | 1,693,694 | 1,209,886 | 16,227,974 | 5,488,112 |
Deconsolidations of VIEs | (2,534,918) | (3,462,857) | (5,118,669) | (3,480,698) |
Balance at the end of the period | 77,221,472 | 91,522,844 | 77,221,472 | 91,522,844 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (4,197,733) | (7,934,365) | (8,052,865) | (14,319,255) |
Total realized and unrealized (losses) gains: | ||||
Issuances | (750) | (596) | (7,513) | |
Transfers into Level III | (557,543) | (623,538) | (972,587) | (816,018) |
Transfers out of Level III | 35,759 | 174,376 | 146,724 | 723,746 |
VIE liabilities | Level III | ||||
Changes in financial liabilities classified as Level III | ||||
Balance at the beginning of the period | (3,038,534) | (2,145,458) | (2,552,448) | (4,893,120) |
Total realized and unrealized (losses) gains: | ||||
Included in earnings: Change in fair value/ gain on sale | 57,477 | 490,913 | 293,600 | 2,951,583 |
Issuances | (750) | (596) | (7,513) | |
Cash repayments / receipts | 14,922 | 27,051 | 20,772 | 74,988 |
Transfers into Level III | (557,543) | (623,538) | (972,587) | (816,018) |
Transfers out of Level III | 35,759 | 174,376 | 146,724 | 723,746 |
Consolidations of VIEs | (53,252) | (34,133) | (483,905) | (145,205) |
Deconsolidations of VIEs | 519 | 528 | 7,788 | 528 |
Balance at the end of the period | (3,540,652) | (2,111,011) | (3,540,652) | (2,111,011) |
Amount of total gains (losses) included in earnings attributable to assets still held at end of period | 57,477 | 490,913 | 293,600 | 2,951,583 |
Loans held-for-sale | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 154,225 | 343,770 | 203,865 | 391,620 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 13,235 | 10,831 | 20,126 | 31,962 |
Purchases / Originations | 288,186 | 476,699 | 488,756 | 889,919 |
Sales | (218,369) | (551,634) | (475,333) | (1,033,644) |
Cash repayments / receipts | (171) | (314) | (308) | (505) |
Balance at the end of the period | 237,106 | 279,352 | 237,106 | 279,352 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 1,810 | (2,382) | 1,810 | (2,382) |
RMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 210,898 | 197,385 | 176,224 | 207,053 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Net accretion | 3,742 | 4,042 | 7,157 | 13,487 |
Included in OCI | 5,951 | (1,150) | 2,551 | (8,776) |
Purchases / Originations | 46,866 | 88,336 | ||
Cash repayments / receipts | (16,197) | (7,127) | (23,008) | (18,614) |
Balance at the end of the period | 251,260 | 193,150 | 251,260 | 193,150 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 3,742 | 4,042 | 7,157 | 7,994 |
CMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 96,724 | 308,195 | 212,981 | 334,080 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 1,349 | 936 | 2,316 | 776 |
Included in OCI | 5,019 | (198) | ||
Purchases / Originations | 24,403 | 250 | 57,576 | 8,988 |
Sales | (1,269) | (385) | (1,269) | (5,098) |
Cash repayments / receipts | (7,142) | (19,445) | (223) | |
Consolidations of VIEs | (138,342) | (24,310) | ||
Deconsolidations of VIEs | 275 | 137 | 523 | 137 |
Balance at the end of the period | 114,340 | 314,152 | 114,340 | 314,152 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 2,208 | 1,097 | 3,778 | 981 |
Domestic servicing rights | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 95,492 | 130,761 | 119,698 | 132,303 |
Impact of ASU 2015-02 Adoption | (17,467) | |||
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (12,191) | (2,652) | (18,930) | (4,194) |
Balance at the end of the period | 83,301 | 128,109 | 83,301 | 128,109 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (12,191) | (2,652) | (18,930) | (4,194) |
VIE Assets | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 85,115,662 | 103,363,978 | 76,675,689 | 107,816,065 |
Impact of ASU 2015-02 Adoption | 17,467 | |||
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (4,250,779) | (8,425,383) | (8,340,280) | (17,273,237) |
Consolidations of VIEs | 1,746,946 | 1,244,019 | 16,850,221 | 5,657,627 |
Deconsolidations of VIEs | (2,535,712) | (3,463,522) | (5,126,980) | (3,481,363) |
Balance at the end of the period | 80,076,117 | 92,719,092 | 80,076,117 | 92,719,092 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | $ (4,250,779) | $ (8,425,383) | $ (8,340,280) | $ (17,273,237) |
Fair Value - Financial Instrume
Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Financial assets not carried at fair value: | ||
HTM securities | $ 520,342 | $ 321,244 |
Financial liabilities not carried at fair value: | ||
Convertible senior notes | 1,334,424 | 1,323,795 |
Carrying Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment and loans transferred as secured borrowings | 5,786,720 | 6,059,652 |
HTM securities | 520,342 | 321,244 |
European servicing rights | 1,589 | 2,626 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 4,570,889 | 4,068,699 |
Convertible senior notes | 1,334,424 | 1,323,795 |
Fair Value. | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment and loans transferred as secured borrowings | 5,813,816 | 6,125,881 |
HTM securities | 505,648 | 315,255 |
European servicing rights | 4,406 | 5,302 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 4,564,186 | 4,092,264 |
Convertible senior notes | $ 1,347,889 | $ 1,331,979 |
Fair Value - Significant unobse
Fair Value - Significant unobservable inputs (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 89,386,361 | $ 85,698,354 |
Carrying Value | 85,286,268 | $ 81,527,411 |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 3,540,652 | |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 0.00% | 0.00% |
Duration | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 779.70% | 920.20% |
Duration | 14 years 3 months 18 days | 17 years 6 months |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 237,106 | |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 4.20% | 4.80% |
Duration | 5 years | 5 years |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 6.20% | 5.30% |
Duration | 10 years 8 months 12 days | 10 years |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 251,260 | |
Portfolio percentage | 66.00% | 76.00% |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Constant prepayment rate (as a percent) | 2.90% | 2.60% |
Constant default rate (as a percent) | 0.90% | 1.00% |
Loss severity (as a percent) | 7.00% | 10.00% |
Delinquency rate (as a percent) | 2.00% | 2.00% |
Servicer advances (as a percent) | 18.00% | 30.00% |
Annual coupon deterioration (as a percent) | 0.00% | 0.00% |
Putback amount per projected total collateral loss (as a percent) | 0.00% | 0.00% |
Loss severity for specified percentage of portfolio (as a percent) | 45.00% | |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Constant prepayment rate (as a percent) | 15.60% | 17.80% |
Constant default rate (as a percent) | 8.80% | 8.90% |
Loss severity (as a percent) | 79.00% | 79.00% |
Delinquency rate (as a percent) | 28.00% | 29.00% |
Servicer advances (as a percent) | 94.00% | 94.00% |
Annual coupon deterioration (as a percent) | 0.60% | 0.50% |
Putback amount per projected total collateral loss (as a percent) | 15.00% | 11.00% |
Loss severity for specified percentage of portfolio (as a percent) | 80.00% | |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 114,340 | |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 0.00% | 0.00% |
Duration | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 332.80% | 435.80% |
Duration | 9 years 6 months | 18 years 6 months |
Fair value measurements on recurring basis | Level III | Domestic servicing rights | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 83,301 | |
Yield (as a percent) | 8.00% | 8.25% |
Discount rate (as a percent) | 15.00% | 15.00% |
Fair value measurements on recurring basis | Level III | Domestic servicing rights | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Control migration (as a percent) | 0.00% | 0.00% |
Fair value measurements on recurring basis | Level III | Domestic servicing rights | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Control migration (as a percent) | 80.00% | 80.00% |
Fair value measurements on recurring basis | Level III | VIE Assets | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 80,076,117 | |
Fair value measurements on recurring basis | Level III | VIE Assets | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 0.00% | 0.00% |
Duration | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | VIE Assets | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 779.70% | 920.20% |
Duration | 14 years 3 months 18 days | 17 years 6 months |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Income Taxes | ||||
Assets owned | $ 89,386,361 | $ 85,698,354 | ||
Cash | 404,820 | 368,815 | $ 446,478 | $ 255,187 |
Investment and Servicing Segment | TRS entities | ||||
Income Taxes | ||||
Assets owned | 867,800 | 858,500 | ||
Cash | $ 72,400 | $ 185,600 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Reconciliation of statutory tax to effective tax | ||||
Federal statutory tax rate | $ 39,472 | $ 42,501 | $ 48,971 | $ 90,357 |
REIT and other non-taxable income | (39,171) | (40,510) | (48,135) | (75,482) |
State income taxes | 72 | 179 | (23) | 2,180 |
Federal benefit of state tax deduction | (25) | (63) | 8 | (763) |
Valuation allowance | 1,618 | 2,873 | ||
Other | 358 | 67 | (21) | 578 |
Effective tax rate | $ 706 | $ 3,792 | $ 800 | $ 19,743 |
Reconciliation of statutory tax rate to effective tax rate | ||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 35.00% | 35.00% |
REIT and other non-taxable income (as a percent) | (34.70%) | (33.30%) | (34.40%) | (29.20%) |
State income taxes (as a percent) | 0.10% | 0.10% | 0.80% | |
Federal benefit of state tax deduction (as a percent) | (0.10%) | (0.10%) | (0.30%) | |
Valuation allowance (as a percent) | 1.30% | 1.10% | ||
Other (as a percent) | 0.30% | 0.10% | 0.20% | |
Effective tax rate (as a percent) | 0.60% | 3.10% | 0.60% | 7.60% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Commitments $ in Billions | Jun. 30, 2016USD ($)loan |
Operating leases | |
Number of loans with future funding commitments | loan | 54 |
Value of loans with future funding commitments | $ 1.7 |
Value of loans with future funding commitments expected to fund | $ 1.4 |
Segment Data - Results of Opera
Segment Data - Results of Operations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues: | |||||
Interest income from loans | $ 122,557 | $ 118,292 | $ 240,089 | $ 236,721 | |
Interest income from investment securities | 15,301 | 23,810 | 34,704 | 51,554 | |
Servicing fees | 23,312 | 30,154 | 48,003 | 58,411 | |
Rental income | 37,843 | 5,014 | 70,520 | 7,686 | |
Other revenues | 979 | 1,390 | 2,169 | 3,137 | |
Total revenues | 199,992 | 178,660 | 395,485 | 357,509 | |
Costs and expenses: | |||||
Management fees | 23,767 | 26,821 | 48,730 | 54,789 | |
Interest expense | 57,635 | 49,799 | 114,155 | 100,333 | |
General and administrative | 35,409 | 41,404 | 68,207 | 76,668 | |
Acquisition and investment pursuit costs | 2,888 | 4,867 | 4,173 | 6,053 | |
Costs of rental operations | 15,852 | 1,211 | 28,507 | 2,909 | |
Depreciation and amortization | 19,073 | 5,828 | 37,833 | 9,913 | |
Loan loss allowance, net | 2,029 | 2,661 | 1,268 | 2,978 | |
Other expense | 100 | 375 | |||
Total costs and expenses | 156,653 | 132,591 | 302,973 | 254,018 | |
Income before other income (loss), income taxes and non-controlling interests | 43,339 | 46,069 | 92,512 | 103,491 | |
Other income (loss): | |||||
Change in net assets related to consolidated VIEs | 50,707 | 55,873 | 46,540 | 103,734 | |
Change in fair value of servicing rights | (12,191) | (2,652) | (18,930) | (4,194) | |
Change in fair value of investment securities, net | 1,319 | 1,446 | 2,072 | 947 | |
Change in fair value of mortgage loans held-for-sale, net | 13,235 | 10,831 | 20,126 | 31,962 | |
Earnings from unconsolidated entities | 4,479 | 8,951 | 8,544 | 15,041 | |
(Loss) gain on sale of investments and other assets, net | (90) | 209 | 155 | 17,407 | |
Gain (loss) on derivative financial instruments, net | 20,253 | (19,530) | (4,465) | 5,093 | |
Foreign currency (loss), gain net | (16,988) | 20,854 | (17,366) | (9,453) | |
Loss on extinguishment of debt | (629) | (5,921) | |||
Other income, net | 8,714 | 10 | 10,729 | 55 | |
Total other income (loss) | 69,438 | 75,363 | 47,405 | 154,671 | |
Income before income taxes | 112,777 | 121,432 | 139,917 | 258,162 | |
Income tax benefit (provision) | (706) | (3,792) | (800) | (19,743) | |
Net income | 112,071 | 117,640 | 139,117 | 238,419 | |
Net income attributable to non-controlling interests | (598) | (492) | (987) | (908) | |
Net income attributable to Starwood Property Trust, Inc. | 111,473 | 117,148 | 138,130 | 237,511 | |
Investment and Servicing Segment | |||||
Other income (loss): | |||||
(Loss) gain on sale of investments and other assets, net | $ 17,100 | ||||
Operating Segments and Corporate | |||||
Revenues: | |||||
Interest income from loans | 122,557 | 118,292 | 240,089 | 236,721 | |
Interest income from investment securities | 43,481 | 64,322 | 100,735 | 111,314 | |
Servicing fees | 37,455 | 54,447 | 73,832 | 105,479 | |
Rental income | 37,843 | 5,014 | 70,520 | 7,686 | |
Other revenues | 1,152 | 1,635 | 2,523 | 3,644 | |
Total revenues | 242,488 | 243,710 | 487,699 | 464,844 | |
Costs and expenses: | |||||
Management fees | 23,711 | 26,770 | 48,632 | 54,688 | |
Interest expense | 57,635 | 49,799 | 114,155 | 100,333 | |
General and administrative | 35,228 | 41,226 | 67,849 | 76,304 | |
Acquisition and investment pursuit costs | 2,888 | 4,867 | 4,173 | 6,053 | |
Costs of rental operations | 15,852 | 1,211 | 28,507 | 2,909 | |
Depreciation and amortization | 19,073 | 5,828 | 37,833 | 9,913 | |
Loan loss allowance, net | 2,029 | 2,661 | 1,268 | 2,978 | |
Other expense | 100 | 375 | |||
Total costs and expenses | 156,416 | 132,362 | 302,517 | 253,553 | |
Income before other income (loss), income taxes and non-controlling interests | 86,072 | 111,348 | 185,182 | 211,291 | |
Other income (loss): | |||||
Change in fair value of servicing rights | (11,034) | (8,381) | (19,704) | (13,256) | |
Change in fair value of investment securities, net | 7,429 | (2,681) | (44,313) | 5,293 | |
Change in fair value of mortgage loans held-for-sale, net | 13,235 | 10,831 | 20,126 | 31,962 | |
Earnings from unconsolidated entities | 4,939 | 9,243 | 9,213 | 15,463 | |
(Loss) gain on sale of investments and other assets, net | (90) | 209 | 155 | 17,407 | |
Gain (loss) on derivative financial instruments, net | 20,253 | (19,530) | (4,465) | 5,093 | |
Foreign currency (loss), gain net | (16,988) | 20,854 | (17,366) | (9,453) | |
Loss on extinguishment of debt | (629) | (5,921) | |||
Other income, net | 8,714 | 10 | 10,729 | 55 | |
Total other income (loss) | 26,458 | 9,926 | (45,625) | 46,643 | |
Income before income taxes | 112,530 | 121,274 | 139,557 | 257,934 | |
Income tax benefit (provision) | (706) | (3,792) | (800) | (19,743) | |
Net income | 111,824 | 117,482 | 138,757 | 238,191 | |
Net income attributable to non-controlling interests | (351) | (334) | (627) | (680) | |
Net income attributable to Starwood Property Trust, Inc. | 111,473 | 117,148 | 138,130 | 237,511 | |
Operating segment | Lending Segment | |||||
Revenues: | |||||
Interest income from loans | 119,296 | 113,928 | 233,954 | 227,400 | |
Interest income from investment securities | 11,046 | 17,050 | 20,674 | 39,346 | |
Servicing fees | 206 | 98 | 365 | 182 | |
Other revenues | 58 | 334 | 81 | 413 | |
Total revenues | 130,606 | 131,410 | 255,074 | 267,341 | |
Costs and expenses: | |||||
Management fees | 395 | 367 | 770 | 755 | |
Interest expense | 22,572 | 20,197 | 44,907 | 41,720 | |
General and administrative | 4,540 | 6,083 | 8,462 | 10,941 | |
Acquisition and investment pursuit costs | 942 | 224 | 1,280 | 997 | |
Loan loss allowance, net | 2,029 | 2,661 | 1,268 | 2,978 | |
Total costs and expenses | 30,478 | 29,532 | 56,687 | 57,391 | |
Income before other income (loss), income taxes and non-controlling interests | 100,128 | 101,878 | 198,387 | 209,950 | |
Other income (loss): | |||||
Change in fair value of investment securities, net | (30) | 510 | (244) | 171 | |
Earnings from unconsolidated entities | 1,224 | 1,361 | 1,692 | 2,216 | |
(Loss) gain on sale of investments and other assets, net | (90) | 209 | 155 | 307 | |
Gain (loss) on derivative financial instruments, net | 15,868 | (23,954) | 12,842 | 8,909 | |
Foreign currency (loss), gain net | (17,840) | 21,181 | (19,662) | (8,155) | |
Total other income (loss) | (868) | (693) | (5,217) | 3,448 | |
Income before income taxes | 99,260 | 101,185 | 193,170 | 213,398 | |
Income tax benefit (provision) | (75) | 30 | |||
Net income | 99,260 | 101,185 | 193,095 | 213,428 | |
Net income attributable to non-controlling interests | (348) | (334) | (698) | (680) | |
Net income attributable to Starwood Property Trust, Inc. | 98,912 | 100,851 | 192,397 | 212,748 | |
Operating segment | Investment and Servicing Segment | |||||
Revenues: | |||||
Interest income from loans | 3,261 | 4,364 | 6,135 | 9,321 | |
Interest income from investment securities | 32,435 | 47,272 | 80,061 | 71,968 | |
Servicing fees | 37,249 | 54,349 | 73,467 | 105,297 | |
Rental income | 8,223 | 1,478 | 14,698 | 4,150 | |
Other revenues | 1,076 | 1,301 | 2,418 | 3,231 | |
Total revenues | 82,244 | 108,764 | 176,779 | 193,967 | |
Costs and expenses: | |||||
Management fees | 12 | 18 | 30 | 36 | |
Interest expense | 3,328 | 2,751 | 6,566 | 4,870 | |
General and administrative | 26,721 | 32,626 | 52,015 | 61,815 | |
Acquisition and investment pursuit costs | 780 | 505 | 1,135 | 718 | |
Costs of rental operations | 3,661 | 878 | 6,723 | 2,576 | |
Depreciation and amortization | 3,730 | 4,213 | 6,781 | 8,298 | |
Other expense | 100 | 375 | |||
Total costs and expenses | 38,232 | 40,991 | 73,350 | 78,688 | |
Income before other income (loss), income taxes and non-controlling interests | 44,012 | 67,773 | 103,429 | 115,279 | |
Other income (loss): | |||||
Change in fair value of servicing rights | (11,034) | (8,381) | (19,704) | (13,256) | |
Change in fair value of investment securities, net | 7,459 | (3,191) | (44,069) | 5,122 | |
Change in fair value of mortgage loans held-for-sale, net | 13,235 | 10,831 | 20,126 | 31,962 | |
Earnings from unconsolidated entities | 1,286 | 5,328 | 2,663 | 8,052 | |
(Loss) gain on sale of investments and other assets, net | 17,100 | ||||
Gain (loss) on derivative financial instruments, net | (3,945) | 4,274 | (15,190) | (3,733) | |
Foreign currency (loss), gain net | 870 | (120) | 2,330 | (1,291) | |
Other income, net | 34 | 10 | 77 | 41 | |
Total other income (loss) | 7,905 | 8,751 | (53,767) | 43,997 | |
Income before income taxes | 51,917 | 76,524 | 49,662 | 159,276 | |
Income tax benefit (provision) | (706) | (3,792) | (725) | (19,773) | |
Net income | 51,211 | 72,732 | 48,937 | 139,503 | |
Net income attributable to non-controlling interests | (3) | 71 | |||
Net income attributable to Starwood Property Trust, Inc. | 51,208 | 72,732 | 49,008 | 139,503 | |
Operating segment | Property Segment | |||||
Revenues: | |||||
Rental income | 29,620 | 3,536 | 55,822 | 3,536 | |
Other revenues | 18 | 24 | |||
Total revenues | 29,638 | 3,536 | 55,846 | 3,536 | |
Costs and expenses: | |||||
Interest expense | 5,678 | 877 | 10,627 | 877 | |
General and administrative | 837 | 174 | 1,392 | 176 | |
Acquisition and investment pursuit costs | 166 | 4,262 | 758 | 4,262 | |
Costs of rental operations | 12,191 | 333 | 21,784 | 333 | |
Depreciation and amortization | 15,343 | 1,615 | 31,052 | 1,615 | |
Total costs and expenses | 34,215 | 7,261 | 65,613 | 7,263 | |
Income before other income (loss), income taxes and non-controlling interests | (4,577) | (3,725) | (9,767) | (3,727) | |
Other income (loss): | |||||
Earnings from unconsolidated entities | 2,429 | 2,554 | 4,858 | 5,195 | |
Gain (loss) on derivative financial instruments, net | 8,330 | 150 | (2,117) | (83) | |
Foreign currency (loss), gain net | (18) | (207) | (34) | (7) | |
Other income, net | 8,680 | 9,102 | |||
Total other income (loss) | 19,421 | 2,497 | 11,809 | 5,105 | |
Income before income taxes | 14,844 | (1,228) | 2,042 | 1,378 | |
Net income | 14,844 | (1,228) | 2,042 | 1,378 | |
Net income attributable to Starwood Property Trust, Inc. | 14,844 | (1,228) | 2,042 | 1,378 | |
Corporate | |||||
Costs and expenses: | |||||
Management fees | 23,304 | 26,385 | 47,832 | 53,897 | |
Interest expense | 26,057 | 25,974 | 52,055 | 52,866 | |
General and administrative | 3,130 | 2,343 | 5,980 | 3,372 | |
Acquisition and investment pursuit costs | 1,000 | (124) | 1,000 | 76 | |
Total costs and expenses | 53,491 | 54,578 | 106,867 | 110,211 | |
Income before other income (loss), income taxes and non-controlling interests | (53,491) | (54,578) | (106,867) | (110,211) | |
Other income (loss): | |||||
Loss on extinguishment of debt | (629) | (5,921) | |||
Other income, net | 1,550 | 14 | |||
Total other income (loss) | (629) | 1,550 | (5,907) | ||
Income before income taxes | (53,491) | (55,207) | (105,317) | (116,118) | |
Net income | (53,491) | (55,207) | (105,317) | (116,118) | |
Net income attributable to Starwood Property Trust, Inc. | (53,491) | (55,207) | (105,317) | (116,118) | |
Investment and Servicing VIEs | |||||
Revenues: | |||||
Interest income from investment securities | (28,180) | (40,512) | (66,031) | (59,760) | |
Servicing fees | (14,143) | (24,293) | (25,829) | (47,068) | |
Other revenues | (173) | (245) | (354) | (507) | |
Total revenues | (42,496) | (65,050) | (92,214) | (107,335) | |
Costs and expenses: | |||||
Management fees | 56 | 51 | 98 | 101 | |
General and administrative | 181 | 178 | 358 | 364 | |
Total costs and expenses | 237 | 229 | 456 | 465 | |
Income before other income (loss), income taxes and non-controlling interests | (42,733) | (65,279) | (92,670) | (107,800) | |
Other income (loss): | |||||
Change in net assets related to consolidated VIEs | 50,707 | 55,873 | 46,540 | 103,734 | |
Change in fair value of servicing rights | (1,157) | 5,729 | 774 | 9,062 | |
Change in fair value of investment securities, net | (6,110) | 4,127 | 46,385 | (4,346) | |
Earnings from unconsolidated entities | (460) | (292) | (669) | (422) | |
Total other income (loss) | 42,980 | 65,437 | 93,030 | 108,028 | |
Income before income taxes | 247 | 158 | 360 | 228 | |
Net income | 247 | 158 | 360 | 228 | |
Net income attributable to non-controlling interests | $ (247) | $ (158) | $ (360) | $ (228) |
Segment Data - Balance sheets (
Segment Data - Balance sheets (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Assets: | ||||||
Cash and cash equivalents | $ 404,820 | $ 368,815 | $ 446,478 | $ 255,187 | ||
Restricted cash | 41,131 | 23,069 | ||||
Loans held-for-investment, net | 5,693,452 | 5,973,079 | ||||
Loans held-for-sale | 237,106 | 203,865 | ||||
Loans transferred as secured borrowings | 93,268 | 86,573 | ||||
Investment securities | 898,803 | 724,947 | ||||
Properties, net | 1,232,855 | 919,225 | ||||
Intangible assets | 177,053 | 201,570 | ||||
Investment in unconsolidated entities | 200,541 | 199,201 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 42,692 | 45,091 | ||||
Accrued interest receivable | 30,036 | 34,314 | ||||
Other assets | 118,050 | 102,479 | ||||
VIE assets, at fair value | 80,076,117 | 76,675,689 | ||||
Total Assets | 89,386,361 | 85,698,354 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 140,612 | 156,805 | ||||
Related-party payable | 20,318 | 40,955 | ||||
Dividends payable | 115,013 | 114,947 | ||||
Derivative liabilities | 17,870 | 5,196 | ||||
Secured financing agreements, net | 4,476,221 | 3,980,699 | ||||
Convertible senior notes, net | 1,334,424 | 1,323,795 | ||||
Secured borrowings on transferred loans | 94,668 | 88,000 | ||||
VIE liabilities, at fair value | 79,087,142 | 75,817,014 | ||||
Total Liabilities | 85,286,268 | 81,527,411 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,427 | 2,410 | ||||
Additional paid-in capital | 4,220,887 | 4,192,844 | ||||
Treasury stock | (92,104) | (72,381) | ||||
Accumulated other comprehensive income (loss) | 32,627 | $ 33,457 | 29,729 | 45,901 | $ 39,362 | 55,896 |
Retained earnings (accumulated deficit) | (103,373) | (12,286) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,060,464 | 4,140,316 | ||||
Non-controlling interests in consolidated subsidiaries | 39,629 | 30,627 | ||||
Total Equity | 4,100,093 | 4,170,943 | $ 4,219,125 | $ 3,882,912 | ||
Total Liabilities and Equity | 89,386,361 | 85,698,354 | ||||
Operating Segments and Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 403,664 | 367,837 | ||||
Restricted cash | 41,131 | 23,069 | ||||
Loans held-for-investment, net | 5,693,452 | 5,973,079 | ||||
Loans held-for-sale | 237,106 | 203,865 | ||||
Loans transferred as secured borrowings | 93,268 | 86,573 | ||||
Investment securities | 1,835,372 | 1,550,166 | ||||
Properties, net | 1,232,855 | 919,225 | ||||
Intangible assets | 206,625 | 213,399 | ||||
Investment in unconsolidated entities | 208,435 | 206,426 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 42,692 | 45,091 | ||||
Accrued interest receivable | 30,036 | 34,314 | ||||
Other assets | 120,422 | 104,536 | ||||
Total Assets | 10,285,495 | 9,868,017 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 139,830 | 156,116 | ||||
Related-party payable | 20,318 | 40,955 | ||||
Dividends payable | 115,013 | 114,947 | ||||
Derivative liabilities | 17,870 | 5,196 | ||||
Secured financing agreements, net | 4,476,221 | 3,980,699 | ||||
Convertible senior notes, net | 1,334,424 | 1,323,795 | ||||
Secured borrowings on transferred loans | 94,668 | 88,000 | ||||
Total Liabilities | 6,198,344 | 5,709,708 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,427 | 2,410 | ||||
Additional paid-in capital | 4,220,887 | 4,192,844 | ||||
Treasury stock | (92,104) | (72,381) | ||||
Accumulated other comprehensive income (loss) | 32,627 | 29,729 | ||||
Retained earnings (accumulated deficit) | (103,373) | (12,286) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,060,464 | 4,140,316 | ||||
Non-controlling interests in consolidated subsidiaries | 26,687 | 17,993 | ||||
Total Equity | 4,087,151 | 4,158,309 | ||||
Total Liabilities and Equity | 10,285,495 | 9,868,017 | ||||
Operating segment | Lending Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 127,803 | 83,836 | ||||
Restricted cash | 17,359 | 9,775 | ||||
Loans held-for-investment, net | 5,687,399 | 5,973,079 | ||||
Loans transferred as secured borrowings | 93,268 | 86,573 | ||||
Investment securities | 784,463 | 511,966 | ||||
Investment in unconsolidated entities | 30,873 | 30,827 | ||||
Derivative assets | 32,446 | 33,412 | ||||
Accrued interest receivable | 29,028 | 34,028 | ||||
Other assets | 12,234 | 7,938 | ||||
Total Assets | 6,814,873 | 6,771,434 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 9,352 | 18,822 | ||||
Derivative liabilities | 13,706 | 5,190 | ||||
Secured financing agreements, net | 2,600,851 | 2,341,897 | ||||
Secured borrowings on transferred loans | 94,668 | 88,000 | ||||
Total Liabilities | 2,718,577 | 2,453,909 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 2,062,358 | 2,477,987 | ||||
Accumulated other comprehensive income (loss) | 39,472 | 37,242 | ||||
Retained earnings (accumulated deficit) | 1,983,102 | 1,790,705 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,084,932 | 4,305,934 | ||||
Non-controlling interests in consolidated subsidiaries | 11,364 | 11,591 | ||||
Total Equity | 4,096,296 | 4,317,525 | ||||
Total Liabilities and Equity | 6,814,873 | 6,771,434 | ||||
Operating segment | Investment and Servicing Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 69,803 | 62,649 | ||||
Restricted cash | 16,092 | 8,826 | ||||
Loans held-for-investment, net | 6,053 | |||||
Loans held-for-sale | 237,106 | 203,865 | ||||
Investment securities | 1,050,909 | 1,038,200 | ||||
Properties, net | 220,340 | 150,497 | ||||
Intangible assets | 154,975 | 152,278 | ||||
Investment in unconsolidated entities | 55,432 | 53,145 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 2,736 | 2,087 | ||||
Accrued interest receivable | 1,008 | 286 | ||||
Other assets | 74,481 | 71,505 | ||||
Total Assets | 2,029,372 | 1,883,775 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 58,583 | 90,399 | ||||
Related-party payable | 555 | 423 | ||||
Derivative liabilities | 4,163 | 6 | ||||
Secured financing agreements, net | 503,864 | 422,260 | ||||
Total Liabilities | 567,165 | 513,088 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 1,183,776 | 1,146,926 | ||||
Accumulated other comprehensive income (loss) | (6,973) | (3,714) | ||||
Retained earnings (accumulated deficit) | 270,081 | 221,073 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 1,446,884 | 1,364,285 | ||||
Non-controlling interests in consolidated subsidiaries | 15,323 | 6,402 | ||||
Total Equity | 1,462,207 | 1,370,687 | ||||
Total Liabilities and Equity | 2,029,372 | 1,883,775 | ||||
Operating segment | Property Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 18,723 | 2,944 | ||||
Restricted cash | 7,680 | 4,468 | ||||
Properties, net | 1,012,515 | 768,728 | ||||
Intangible assets | 51,650 | 61,121 | ||||
Investment in unconsolidated entities | 122,130 | 122,454 | ||||
Derivative assets | 7,510 | 9,592 | ||||
Other assets | 32,544 | 23,657 | ||||
Total Assets | 1,252,752 | 992,964 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 48,600 | 25,427 | ||||
Derivative liabilities | 1 | |||||
Secured financing agreements, net | 725,856 | 568,738 | ||||
Total Liabilities | 774,457 | 594,165 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 467,993 | 394,465 | ||||
Accumulated other comprehensive income (loss) | 128 | (3,799) | ||||
Retained earnings (accumulated deficit) | 10,174 | 8,133 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 478,295 | 398,799 | ||||
Total Equity | 478,295 | 398,799 | ||||
Total Liabilities and Equity | 1,252,752 | 992,964 | ||||
Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 187,335 | 218,408 | ||||
Other assets | 1,163 | 1,436 | ||||
Total Assets | 188,498 | 219,844 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 23,295 | 21,468 | ||||
Related-party payable | 19,763 | 40,532 | ||||
Dividends payable | 115,013 | 114,947 | ||||
Secured financing agreements, net | 645,650 | 647,804 | ||||
Convertible senior notes, net | 1,334,424 | 1,323,795 | ||||
Total Liabilities | 2,138,145 | 2,148,546 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,427 | 2,410 | ||||
Additional paid-in capital | 506,760 | 173,466 | ||||
Treasury stock | (92,104) | (72,381) | ||||
Retained earnings (accumulated deficit) | (2,366,730) | (2,032,197) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | (1,949,647) | (1,928,702) | ||||
Total Equity | (1,949,647) | (1,928,702) | ||||
Total Liabilities and Equity | 188,498 | 219,844 | ||||
Investment and Servicing VIEs | ||||||
Assets: | ||||||
Cash and cash equivalents | 1,156 | 978 | ||||
Investment securities | (936,569) | (825,219) | ||||
Intangible assets | (29,572) | (11,829) | ||||
Investment in unconsolidated entities | (7,894) | (7,225) | ||||
Other assets | (2,372) | (2,057) | ||||
VIE assets, at fair value | 80,076,117 | 76,675,689 | ||||
Total Assets | 79,100,866 | 75,830,337 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 782 | 689 | ||||
VIE liabilities, at fair value | 79,087,142 | 75,817,014 | ||||
Total Liabilities | 79,087,924 | 75,817,703 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Non-controlling interests in consolidated subsidiaries | 12,942 | 12,634 | ||||
Total Equity | 12,942 | 12,634 | ||||
Total Liabilities and Equity | $ 79,100,866 | $ 75,830,337 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Aug. 04, 2016 | May 09, 2016 | Feb. 25, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Subsequent Events | |||||||
Dividend declared (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 | |
Subsequent Events | |||||||
Subsequent Events | |||||||
Dividend declared (in dollars per share) | $ 0.48 |