Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
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 | Sep. 30, 2018 | |
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 | 275,351,911 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash and cash equivalents | $ 265,757 | $ 369,448 |
Restricted cash | 124,264 | 48,825 |
Loans held-for-investment, net | 8,500,674 | 6,562,495 |
Loans held-for-sale ($913,505 and $745,743 held at fair value) | 1,326,837 | 745,743 |
Loans transferred as secured borrowings | 74,281 | 74,403 |
Investment securities ($289,554 and $284,735 held at fair value) | 763,450 | 718,203 |
Properties, net | 2,888,737 | 2,647,481 |
Properties held-for-sale | 52,302 | |
Intangible assets ($21,768 and $30,759 held at fair value) | 153,948 | 183,092 |
Investment in unconsolidated entities | 168,788 | 185,503 |
Goodwill | 256,425 | 140,437 |
Derivative assets | 59,807 | 33,898 |
Accrued interest receivable | 52,911 | 47,747 |
Other assets | 198,688 | 138,140 |
Variable interest entity (“VIE”) assets, at fair value | 48,034,610 | 51,045,874 |
Total Assets | 62,921,479 | 62,941,289 |
Liabilities: | ||
Accounts payable, accrued expenses and other liabilities | 214,902 | 185,117 |
Related-party payable | 25,286 | 42,369 |
Dividends payable | 132,549 | 125,916 |
Derivative liabilities | 35,386 | 36,200 |
Secured financing agreements, net | 8,586,687 | 5,773,056 |
Unsecured senior notes, net | 2,024,570 | 2,125,235 |
Secured borrowings on transferred loans, net | 74,148 | 74,185 |
VIE liabilities, at fair value | 46,945,674 | 50,000,010 |
Total Liabilities | 58,039,202 | 58,362,088 |
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, 279,302,395 issued and 274,122,255 outstanding as of September 30, 2018 and 265,983,309 issued and 261,376,424 outstanding as of December 31, 2017 | 2,793 | 2,660 |
Additional paid-in capital | 4,963,061 | 4,715,246 |
Treasury stock (5,180,140 shares and 4,606,885 shares) | (104,194) | (92,104) |
Accumulated other comprehensive income | 67,920 | 69,924 |
Accumulated deficit | (308,343) | (217,312) |
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,621,237 | 4,478,414 |
Non-controlling interests in consolidated subsidiaries | 261,040 | 100,787 |
Total Equity | 4,882,277 | 4,579,201 |
Total Liabilities and Equity | $ 62,921,479 | $ 62,941,289 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheets | ||
Loans-held-for-sale held at fair value | $ 913,505 | $ 745,743 |
Investment securities held at fair value | 289,554 | 284,735 |
Intangible assets held at fair value | $ 21,768 | $ 30,759 |
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 | 279,302,395 | 265,983,309 |
Common stock, shares outstanding | 274,122,255 | 261,376,424 |
Treasury stock, shares | 5,180,140 | 4,606,885 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Interest income from loans | $ 154,501 | $ 138,599 | $ 443,825 | $ 371,094 |
Interest income from investment securities | 11,508 | 12,451 | 37,567 | 40,045 |
Servicing fees | 27,824 | 14,842 | 71,206 | 47,572 |
Rental income | 91,132 | 60,153 | 261,133 | 176,161 |
Other revenues | 754 | 722 | 2,131 | 2,184 |
Total revenues | 285,719 | 226,767 | 815,862 | 637,056 |
Costs and expenses: | ||||
Management fees | 26,519 | 30,980 | 84,655 | 79,997 |
Interest expense | 102,658 | 76,431 | 281,433 | 213,608 |
General and administrative | 31,203 | 32,892 | 98,873 | 95,841 |
Acquisition and investment pursuit costs | 6,527 | 1,024 | 8,465 | 2,232 |
Costs of rental operations | 30,191 | 23,799 | 92,781 | 67,701 |
Depreciation and amortization | 34,293 | 22,871 | 103,187 | 67,131 |
Loan loss allowance, net | 929 | (171) | 27,726 | (3,170) |
Other expense | 76 | 376 | 677 | 1,276 |
Total costs and expenses | 232,396 | 188,202 | 697,797 | 524,616 |
Income before other income (loss), income taxes and non-controlling interests | 53,323 | 38,565 | 118,065 | 112,440 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 33,289 | 56,177 | 129,888 | 203,108 |
Change in fair value of servicing rights | (974) | (4,867) | (8,991) | (21,301) |
Change in fair value of investment securities, net | 301 | (397) | 7,854 | (4,061) |
Change in fair value of mortgage loans held-for-sale, net | 3,940 | 19,485 | 26,573 | 45,484 |
Earnings (loss) from unconsolidated entities | 2,625 | (4,689) | 6,633 | 27,763 |
Gain (loss) on sale of investments and other assets, net | 1,462 | 11,877 | 25,559 | 17,004 |
Gain (loss) on derivative financial instruments, net | 11,735 | (24,224) | 27,498 | (66,159) |
Foreign currency gain (loss), net | (4,078) | 10,660 | (3,793) | 28,434 |
Total other-than-temporary impairment (“OTTI”) | (66) | (175) | ||
Noncredit portion of OTTI recognized in other comprehensive income | 66 | 66 | ||
Net impairment losses recognized in earnings | (109) | |||
Loss on extinguishment of debt | (2,540) | (2,726) | (5,916) | |
Other income, net | (1,421) | 28 | (815) | 484 |
Total other income | 44,339 | 64,050 | 207,680 | 224,731 |
Income before income taxes | 97,662 | 102,615 | 325,745 | 337,171 |
Income tax provision | (8,281) | (9,816) | (14,480) | (18,285) |
Net income | 89,381 | 92,799 | 311,265 | 318,886 |
Net income attributable to non-controlling interests | (4,845) | (4,371) | (17,567) | (10,720) |
Net income attributable to Starwood Property Trust, Inc. | $ 84,536 | $ 88,428 | $ 293,698 | $ 308,166 |
Earnings per share data attributable to Starwood Property Trust, Inc.: | ||||
Basic (in dollars per share) | $ 0.31 | $ 0.34 | $ 1.11 | $ 1.18 |
Diluted (in dollars per share) | 0.31 | 0.33 | 1.09 | 1.17 |
Dividend declared (in dollars per share) | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 89,381 | $ 92,799 | $ 311,265 | $ 318,886 |
Other comprehensive income (net change by component): | ||||
Cash flow hedges | (6) | (22) | (24) | 56 |
Available-for-sale securities | 737 | 3,975 | 2,923 | 10,728 |
Foreign currency translation | (945) | 5,337 | (4,903) | 18,349 |
Other comprehensive income | (214) | 9,290 | (2,004) | 29,133 |
Comprehensive income | 89,167 | 102,089 | 309,261 | 348,019 |
Less: Comprehensive income attributable to non-controlling interests | (4,845) | (4,371) | (17,567) | (10,720) |
Comprehensive income attributable to Starwood Property Trust, Inc. | $ 84,322 | $ 97,718 | $ 291,694 | $ 337,299 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total Starwood Property Trust, Inc. Stockholders' Equity2023 Notes | Total Starwood Property Trust, Inc. Stockholders' Equity2018 Notes | Total Starwood Property Trust, Inc. Stockholders' Equity | Common stock | Additional Paid-In Capital2023 Notes | Additional Paid-In Capital2018 Notes | Additional Paid-In Capital | Treasury Stock | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interests | 2023 Notes | 2018 Notes | Total |
Balance at Dec. 31, 2016 | $ 4,522,274 | $ 2,639 | $ 4,691,180 | $ (92,104) | $ (115,579) | $ 36,138 | $ 37,799 | $ 4,560,073 | ||||||
Balance (in shares) at Dec. 31, 2016 | 263,893,806 | 4,606,885 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Proceeds from DRIP Plan | 541 | 541 | 541 | |||||||||||
Proceeds from DRIP Plan (in shares) | 24,217 | |||||||||||||
Equity offering costs | (12) | (12) | $ (12) | |||||||||||
Common stock repurchased (in shares) | 0 | |||||||||||||
Equity component of Convertible Senior Notes issuance | $ 3,755 | $ 3,755 | $ 3,755 | |||||||||||
Equity component of Convertible Senior Notes repurchase | $ (18,105) | $ (18,105) | $ (18,105) | |||||||||||
Share-based compensation | 13,290 | $ 9 | 13,281 | $ 13,290 | ||||||||||
Share-based compensation (in shares) | 849,045 | |||||||||||||
Manager incentive fee paid in stock | 14,410 | $ 6 | 14,404 | 14,410 | ||||||||||
Manager incentive fee paid in stock (in shares) | 639,555 | |||||||||||||
Net income | 308,166 | 308,166 | 10,720 | 318,886 | ||||||||||
Dividends declared | (376,660) | (376,660) | (376,660) | |||||||||||
Other comprehensive income, net | 29,133 | 29,133 | 29,133 | |||||||||||
VIE non-controlling interests | 1,837 | 1,837 | ||||||||||||
Contributions from non-controlling interests | 105 | 105 | ||||||||||||
Distribution to non-controlling interests | (7,519) | (7,519) | ||||||||||||
Balance at Sep. 30, 2017 | 4,496,792 | $ 2,654 | 4,705,044 | $ (92,104) | (184,073) | 65,271 | 42,942 | 4,539,734 | ||||||
Balance (in shares) at Sep. 30, 2017 | 265,406,623 | 4,606,885 | ||||||||||||
Balance at Dec. 31, 2017 | 4,478,414 | $ 2,660 | 4,715,246 | $ (92,104) | (217,312) | 69,924 | 100,787 | $ 4,579,201 | ||||||
Balance (in shares) at Dec. 31, 2017 | 265,983,309 | 4,606,885 | 265,983,309 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Proceeds from DRIP Plan | 459 | 459 | $ 459 | |||||||||||
Proceeds from DRIP Plan (in shares) | 21,512 | |||||||||||||
Equity offering costs | (22) | (22) | (22) | |||||||||||
Conversion of 2019 Convertible Notes | 215,377 | $ 112 | 215,265 | 215,377 | ||||||||||
Conversion of 2019 Convertible Notes (Shares) | 11,181,546 | |||||||||||||
Common stock repurchased | (12,090) | $ (12,090) | $ (12,090) | |||||||||||
Common stock repurchased (in shares) | 573,255 | 573,255 | ||||||||||||
Share-based compensation | 16,454 | $ 12 | 16,442 | $ 16,454 | ||||||||||
Share-based compensation (in shares) | 1,215,137 | |||||||||||||
Manager incentive fee paid in stock | 18,642 | $ 9 | 18,633 | 18,642 | ||||||||||
Manager incentive fee paid in stock (in shares) | 900,891 | |||||||||||||
Net income | 293,698 | 293,698 | 17,567 | 311,265 | ||||||||||
Dividends declared | (384,729) | (384,729) | (384,729) | |||||||||||
Other comprehensive income, net | (2,004) | (2,004) | (2,004) | |||||||||||
VIE non-controlling interests | (291) | (291) | ||||||||||||
Contributions from non-controlling interests | 387,481 | 387,481 | ||||||||||||
Distribution to non-controlling interests | (2,962) | (2,962) | (244,185) | (247,147) | ||||||||||
Sale of controlling interest in majority owned property asset | (319) | (319) | ||||||||||||
Balance at Sep. 30, 2018 | $ 4,621,237 | $ 2,793 | $ 4,963,061 | $ (104,194) | $ (308,343) | $ 67,920 | $ 261,040 | $ 4,882,277 | ||||||
Balance (in shares) at Sep. 30, 2018 | 279,302,395 | 5,180,140 | 279,302,395 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | Aug. 08, 2018 | May 04, 2018 | Feb. 28, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Condensed Consolidated Statements of Equity | |||||||
Dividends declared per common share | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net income | $ 311,265 | $ 318,886 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Amortization of deferred financing costs, premiums and discounts on secured financing agreements and secured borrowings on transferred loans | 18,156 | 14,131 |
Amortization of discounts and deferred financing costs on senior notes | 9,674 | 17,514 |
Accretion of net discount on investment securities | (12,013) | (11,669) |
Accretion of net deferred loan fees and discounts | (28,954) | (27,014) |
Share-based compensation | 16,454 | 13,290 |
Share-based component of incentive fees | 18,642 | 14,410 |
Change in fair value of investment securities | (7,854) | 4,061 |
Change in fair value of consolidated VIEs | (12,173) | (59,160) |
Change in fair value of servicing rights | 8,991 | 21,301 |
Change in fair value of loans held-for-sale | (26,573) | (45,484) |
Change in fair value of derivatives | (24,339) | 62,463 |
Foreign currency gain (loss), net | 3,734 | (28,211) |
Gain on sale of investments and other assets | (25,559) | (17,004) |
Impairment charges on properties and related intangibles | 1,864 | 1,099 |
Loan loss allowance, net | 27,726 | (3,170) |
Depreciation and amortization | 101,760 | 64,937 |
Earnings from unconsolidated entities | (6,633) | (27,763) |
Distributions of earnings from unconsolidated entities | 5,001 | 4,716 |
Loss on extinguishment of debt | 2,726 | 5,916 |
Origination and purchase of loans held-for-sale, net of principal collections | (1,386,609) | (1,487,813) |
Proceeds from sale of loans held-for-sale | 1,243,109 | 987,828 |
Changes in operating assets and liabilities: | ||
Related-party payable, net | (17,083) | (7,829) |
Accrued and capitalized interest receivable, less purchased interest | (37,314) | (63,032) |
Other assets | (32,348) | (12,198) |
Accounts payable, accrued expenses and other liabilities | 22,997 | 37,367 |
Net cash provided by (used in) operating activities | 174,647 | (222,428) |
Cash Flows from Investing Activities: | ||
Origination and purchase of loans held-for-investment | (3,495,080) | (2,195,258) |
Proceeds from principal collections on loans | 2,225,575 | 1,670,159 |
Proceeds from loans sold | 742,496 | 37,079 |
Purchase of investment securities | (312,339) | (69,231) |
Proceeds from sales of investment securities | 6,016 | 11,134 |
Proceeds from principal collections on investment securities | 355,757 | 209,903 |
Infrastructure lending business combination | (2,011,428) | |
Real estate business combinations, net of cash and restricted cash acquired | (18,194) | |
Proceeds from sales and insurance recoveries on properties | 105,548 | 44,219 |
Purchases and additions to properties and other assets | (44,741) | (564,755) |
Investment in unconsolidated entities | (3,100) | (20,544) |
Distribution of capital from unconsolidated entities | 21,448 | 3,858 |
Payments for purchase or termination of derivatives | (18,210) | (41,208) |
Proceeds from termination of derivatives | 15,521 | 23,686 |
Return of investment basis in purchased derivative asset | 151 | |
Net cash used in investing activities | (2,412,537) | (909,001) |
Cash Flows from Financing Activities: | ||
Proceeds from borrowings | 6,845,138 | 4,090,163 |
Principal repayments on and repurchases of borrowings | (3,880,450) | (2,724,179) |
Payment of deferred financing costs | (63,219) | (17,038) |
Proceeds from common stock issuances | 459 | 541 |
Payment of equity offering costs | (22) | (647) |
Payment of dividends | (378,096) | (376,061) |
Contributions from non-controlling interests | 9,066 | 105 |
Distributions to non-controlling interests | (247,147) | (7,519) |
Purchase of treasury stock | (12,090) | |
Issuance of debt of consolidated VIEs | 26,849 | 11,657 |
Repayment of debt of consolidated VIEs | (166,387) | (92,383) |
Distributions of cash from consolidated VIEs | 76,294 | 62,797 |
Net cash provided by financing activities | 2,210,395 | 947,436 |
Net decrease in cash, cash equivalents and restricted cash | (27,495) | (183,993) |
Cash, cash equivalents and restricted cash, beginning of period | 418,273 | 650,755 |
Effect of exchange rate changes on cash | (757) | 1,674 |
Cash, cash equivalents and restricted cash, end of period | 390,021 | 468,436 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 241,173 | 177,604 |
Income taxes paid | 8,223 | 7,722 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Dividends declared, but not yet paid | 132,408 | 125,638 |
Consolidation of VIEs (VIE asset/liability additions) | 3,438,933 | 2,092,516 |
Deconsolidation of VIEs (VIE asset/liability reductions) | 1,395,168 | 2,244,267 |
Net assets acquired from consolidated VIEs | 27,737 | 19,652 |
Fair value of assets acquired, net of cash and restricted cash | 2,020,037 | 18,956 |
Fair value of liabilities assumed | 8,609 | $ 762 |
Contribution of Woodstar II Portfolio net assets from non-controlling interests | 378,415 | |
Settlement of 2019 Convertible Notes in shares | $ 245,172 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2018 | |
Business and Organization | |
Business and Organization | 1. Business and Organizatio 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. 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, infrastructure debt investments, 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 four reportable business segments as of September 30, 2018: · Real estate commercial and residential lending (the “Commercial and Residential Lending Segment,” formerly known as “Real estate lending”)—engages primarily in originating, acquiring, financing and managing commercial and residential 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. · Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments. · Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties, that are held for investment. · Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works 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. Our segments exclude the consolidation of securitization variable interest entities (“VIEs”). 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 | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Balance Sheet Presentation of Securitization Variable Interest Entities We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. 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 we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, 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 our business segments 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, 2017 (our “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2018 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, (iii) became significant since December 31, 2017 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Variable Interest Entities In addition to the securitization VIEs, certain other entities in which we hold interests are 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. 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: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) 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. 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. 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 unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these 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: (i) 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 (ii) 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 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 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 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 trust. REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 2% of our consolidated securitization VIE assets, with the remaining 98% 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 or acquired for future securitization, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities which, effective January 1, 2018, are now required to be carried at fair value through earnings. 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 were made due to the expected short-term holding period of these instruments. 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 VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 19 for further discussion regarding our fair value measurements. Business Combinations Under ASC 805, Business Combinations , the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full goodwill” approach. During the measurement period, a period which shall not exceed one year, we prospectively adjust the provisional amounts recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized. Loans Held-for-Investment 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. In connection with this evaluation, 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. Loan Impairment 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. 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 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, 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. There may be circumstances where we modify a loan by granting the borrower a concession that we might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDRs”) unless the modification solely results in a delay in payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes. Loans Held‑For‑Sale Our loans that we intend to sell or liquidate in the short‑term are classified as held‑for‑sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. Properties Held-For-Sale Properties and any associated intangible assets are presented within properties held-for-sale on our condensed consolidated balance sheet when the sale of the property is considered probable, at which time we cease depreciation and amortization of the property and the associated intangibles. Held-for-sale properties are reported at the lower of their carrying value or fair value less costs to sell. Cost Method Equity Investments On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities , became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer. Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment. Our equity investments within the scope of this ASU are limited to our cost method equity investments discussed in Note 7, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 5 for which we had previously elected the fair value option. Our cost method equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer. Refer to Note 7 for further discussion. Revenue Recognition On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company. Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections. We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms. For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Accretable yield, if any, will be recognized as interest income on a level-yield basis over the life of the loan. Share-Based Payments Effective July 1, 2018, we early adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting , which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. Prior to our adoption of ASU 2018-07, nonemployee share awards were recognized as an expense on a straight-line basis over the vesting period of the award with the fair value of the award remeasured at each vesting date. After our adoption of ASU 2018-07, nonemployee share awards continue to be recorded as expense on a straight-line basis over their vesting period, however, the fair value of the award will only be determined on the grant date and not remeasured at subsequent vesting dates, consistent with the accounting for employee share awards. For non-employee awards granted prior to our July 1, 2018 adoption date, the awards will be remeasured at fair value as of our July 1, 2018 adoption date with no subsequent remeasurement. 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, (iii) the conversion options associated with our outstanding convertible senior notes (see Notes 10 and 17), and (iv) non-controlling interests that are redeemable with our common stock (see Note 16). 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. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 16). 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 nine months ended September 30, 2018 and 2017, 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. Recent Accounting Developments 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 by this ASU. This 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. On July 30, 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements , which provides an optional transition method of applying the new leases standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors with a practical expedient to not separate non-lease revenue components from the associated lease component if certain conditions are met. Our assessment of the effect of these ASUs on the Company remains ongoing; however, we currently do not expect the application of these ASUs to have a material impact as the Company primarily acts as a lessor. 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 current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted though no earlier than the first interim or annual period beginning after December 15, 2018. Though we have not completed our assessment of this ASU, we expect the ASU to result in our recognition of higher levels of allowances for loan losses. Our assessment of the estimated amount of such increases remains in process. On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , which simplifies the method applied for measuring impairment in cases where goodwill is impaired. This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On August 28, 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities , which amends and simplifies existing guidance regarding the designation and measurement of designated hedging relationships. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework , which adds new disclosure requirements and modifies or eliminates existing disclosure requirements of ASC 820. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is pe |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2018 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | 3. Acquisitions Infrastructure Lending Segment On September 19, 2018, we acquired the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC (“GE Capital”) for approximately $2.0 billion (the “Infrastructure Lending Segment”). The business includes $1.9 billion of funded senior secured project finance loans and investment securities and $466.3 million of unfunded lending commitments (the “Infrastructure Lending Portfolio”) which are secured primarily by natural gas and renewable power facilities. The Infrastructure Lending Portfolio is 97% floating rate with 74% of the collateral located in the U.S., 11% in Mexico, 6% in the United Kingdom and the remaining collateral dispersed through the Middle East, Ireland, Australia, Canada and Spain. The loans are predominantly denominated in USD and backed by long term power purchase agreements primarily with investment grade counterparties. The Company hired a team of professionals from GE Capital’s project finance division in connection with the acquisition to manage and expand the Infrastructure Lending Portfolio. We utilized $1.5 billion in new financing in order to fund the acquisition (as set forth in Note 9). Goodwill of $116.0 million was recognized in connection with the Infrastructure Lending Segment acquisition as the consideration paid exceeded the fair value of the net assets acquired. From the acquisition date through September 30, 2018, we have recognized revenues of $3.2 million and a net loss of $5.5 million related to the portfolio. Such net loss primarily reflects interest income from loans and investment securities of $3.2 million, offset by interest expense of $2.3 million and one-time acquisition-related costs including a $3.0 million commitment fee related to an unused bridge financing facility and legal and due diligence costs of $2.8 million. Subsequent to September 30, 2018, on October 15, 2018, we acquired two additional senior secured project finance loans from GE Capital for $147.1 million, utilizing $120.4 million of available financing to fund the acquisition. Purchase Price Allocation We applied the provisions of ASC 805, Business Combinations, in accounting for our acquisition of the Infrastructure Lending Segment. In doing so, we have recorded all identifiable assets acquired and liabilities assumed at fair value as of the acquisition date. These amounts are provisional and may be adjusted during the measurement period, which expires no later than one year from the acquisition date, if new information is obtained that, if known, would have affected the amounts recognized as of the acquisition date. The following table summarizes the preliminary estimate of identified assets acquired and liabilities assumed at the acquisition date (amounts in thousands): Infrastructure Assets acquired: Lending Segment Loans held-for-investment $ 1,506,544 Loans held-for-sale 319,879 Investment securities 65,060 Accrued interest receivable 12,566 Total identifiable assets acquired 1,904,049 Liabilities assumed: Accounts payable, accrued expenses and other liabilities 8,327 Derivative liabilities 282 Total liabilities assumed 8,609 Net assets acquired $ 1,895,440 Goodwill represents the excess of the purchase price over the fair value of the underlying assets acquired and liabilities assumed. This determination of goodwill is as follows (amounts in thousands): Infrastructure Lending Segment Purchase price $ 2,011,428 Preliminary estimate of the fair value of net assets acquired 1,895,440 Goodwill $ 115,988 Pro Forma Operating Data (Unaudited) The unaudited pro forma revenues and net income attributable to the Company for the three and nine months ended September 30, 2018 and 2017, assuming the Infrastructure Lending Segment was acquired on January 1, 2017, are as follows (amounts in thousands, except per share amounts): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenues $ 308,320 $ 248,549 $ 886,931 $ 698,952 Net income attributable to STWD 90,821 88,367 300,288 302,485 Net income per share - Basic 0.34 0.34 1.13 1.16 Net income per share - Diluted 0.34 0.33 1.11 1.14 Investing and Servicing Segment Property Portfolio During the nine months ended September 30, 2018, our Investing and Servicing Segment acquired $52.7 million in net assets of three commercial real estate properties from CMBS trusts for a total gross purchase price of $53.1 million. There were no properties acquired during the three months ended September 30, 2018. These properties, aggregated with the controlling interests in 19 remaining commercial real estate properties acquired from CMBS trusts prior to December 31, 2017 for an aggregate acquisition price of $273.6 million, comprise the Investing and Servicing Segment Property Portfolio (the “REIS Equity 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 condensed consolidated statements of cash flows. During the three and nine months ended September 30, 2018, we sold one and six properties, respectively, within the Investing and Servicing Segment for $8.7 million and $48.7 million, respectively, recognizing a total gain on sale of $1.4 million and $18.2 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. One of these properties was acquired by a third party which already held a $0.3 million non-controlling interest in the property. During the nine months ended September 30, 2018, $3.7 million of the gain on sale was attributable to non-controlling interests. None of the gain on sale was attributable to non-controlling interests during the three months ended September 30, 2018. During the three and nine months ended September 30, 2017, we sold two and four properties within the Investing and Servicing Segment for $26.0 million and $40.7 million, respectively, recognizing a total gain on sale of $11.2 million and $16.3 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. During both the three and nine months ended September 30, 2017, $2.4 million of such gains were attributable to non-controlling interests. Woodstar II Portfolio Acquisition During the three months ended September 30, 2018, we acquired the final property of the 27 affordable housing communities comprising our “Woodstar II Portfolio”, after acquiring 18 of the properties during the three months ended March 31, 2018. The Woodstar II Portfolio in its entirety is comprised of 6,109 units concentrated primarily in Central and South Florida and is 99% occupied. The affordable housing community acquired during the three months ended September 30, 2018 comprises 312 units and was acquired for $33.4 million, including contingent consideration of $2.5 million (the “Q3 2018 Closing”). The property acquired in the Q3 2018 Closing was recognized initially at the purchase price of $30.9 million plus capitalized acquisition costs of $0.5 million. Contingent consideration of $2.5 million will be recognized when the contingency is resolved. Government sponsored mortgage debt of $19.7 million with a fixed annual interest rate of 3.19% and a remaining term of 34.0 years was assumed at closing (as set forth in Note 9). The 18 affordable housing communities acquired during the three months ended March 31, 2018 comprise 4,057 units and were acquired for $404.7 million, including contingent consideration of $26.7 million (the “Q1 2018 Closing”). The properties acquired in the Q1 2018 Closing were recognized initially at their purchase price of $378.0 million plus capitalized acquisition costs of $3.6 million. Contingent consideration of $26.7 million will be recognized when the contingency is resolved. Government sponsored mortgage debt of $7.3 million with weighted average fixed annual interest rates of 2.88% and remaining weighted average terms of 17.7 years was assumed at closing. We financed the Q1 2018 Closing utilizing new 10-year mortgage debt totaling $300.9 million with weighted average fixed annual interest rates of 3.82% (as set forth in Note 9). In December 2017, we acquired eight of the affordable housing communities (the “Q4 2017 Closing”), which include 1,740 units, for $156.2 million, including contingent consideration of $10.8 million. We financed the Q4 2017 Closing utilizing 10-year mortgage debt totaling $116.7 million with a fixed 3.81% interest rate. We effectuated the Woodstar II Portfolio acquisitions via a contribution of the properties by third parties (the “Contributors”) to SPT Dolphin Intermediate LLC (“SPT Dolphin”), a newly-formed, wholly-owned subsidiary of the Company. In exchange for the contribution, the Contributors received cash, Class A units of SPT Dolphin (the “Class A Units”) and rights to receive additional Class A Units if certain contingent events occur. Initially, the Class A unitholders had the right, commencing six months from issuance, to redeem their Class A Units for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. In August 2018, the redemption rights were amended to allow Class A unitholders the option to redeem only after the earlier of (i) October 3, 2018 and (ii) three business days after the August 23, 2018 acquisition of the final property in the Woodstar II Portfolio. No other terms of the redemption rights were amended. No redemptions occurred during the nine months ended September 30, 2018. The Q3 2018 Closing resulted in the Contributors receiving cash of $2.6 million, 424,642 Class A Units and rights to receive an additional 110,228 Class A Units if certain contingent events occur. The Q1 2018 Closing resulted in the Contributors receiving cash of $223.3 million, 6,979,089 Class A Units and rights to receive an additional 1,301,414 Class A Units if certain contingent events occur. In aggregate, the Q3 2018 Closing, Q1 2018 Closing and Q4 2017 Closing have resulted in the Contributors receiving cash of $310.7 million, 10,183,505 Class A Units and rights to receive an additional 1,910,563 Class A Units if certain contingent events occur. Since substantially all of the fair value of the properties acquired was concentrated in a group of similar identifiable assets, the Woodstar II Portfolio acquisitions were accounted for in accordance with the asset acquisition provisions of ASC 805, Business Combinations . Master Lease Portfolio During the nine months ended September 30, 2018, we sold three retail properties within the Master Lease Portfolio for $55.6 million, recognizing a gain on sale of $6.9 million within gain on sale of investments and other assets in our condensed consolidated statement of operations. There were no properties sold within the Master Lease Portfolio during the three months ended September 30, 2018 or the nine months ended September 30, 2017. Refer to Note 6 for further discussion of the Master Lease Portfolio. Ireland Portfolio During the nine months ended September 30, 2017, we sold one office property within the Ireland Portfolio for $3.9 million, recognizing an immaterial gain on sale within gain on sale of investments and other assets in our condensed consolidated statement of operations. There were no properties sold within the Ireland Portfolio during the nine months ended September 30, 2018. Refer to Note 6 for further discussion of the Ireland Portfolio. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) September 30, 2018 Value Amount Coupon (years)(1) First mortgages (2) $ 6,474,478 $ 6,496,376 6.7 % 2.1 First priority infrastructure loans 1,492,276 1,510,157 5.1 % 3.5 Subordinated mortgages (3) 188,402 188,266 11.5 % 1.3 Mezzanine loans (2) 352,300 351,866 10.8 % 1.8 Other 25,274 28,677 8.7 % 3.5 Total loans held-for-investment 8,532,730 8,575,342 Loans held-for-sale, fair value option, residential 626,719 607,616 6.3 % 5.3 Loans held-for-sale, commercial (carrying value of $286,786 under fair value option) 379,848 382,270 4.8 % 8.4 Loans held-for-sale, infrastructure 320,270 324,422 3.4 % 5.7 Loans transferred as secured borrowings 74,281 74,692 6.9 % 1.5 Total gross loans 9,933,848 9,964,342 Loan loss allowance (loans held-for-investment) (32,056) — Total net loans $ 9,901,792 $ 9,964,342 December 31, 2017 First mortgages (2) $ 5,818,804 $ 5,843,623 6.2 % 2.0 Subordinated mortgages (3) 177,115 177,386 10.8 % 1.9 Mezzanine loans (2) 545,299 545,355 11.0 % 1.1 Other 25,607 29,320 8.5 % 3.9 Total loans held-for-investment 6,566,825 6,595,684 Loans held-for-sale, fair value option, residential 613,287 594,105 6.2 % 5.4 Loans held-for-sale, fair value option, commercial 132,456 132,393 4.6 % 10.0 Loans transferred as secured borrowings 74,403 75,000 6.2 % 2.3 Total gross loans 7,386,971 7,397,182 Loan loss allowance (loans held-for-investment) (4,330) — Total net loans $ 7,382,641 $ 7,397,182 (1) Represents the remaining WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition. (2) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $1.0 billion and $851.1 million being classified as first mortgages as of September 30, 2018 and December 31, 2017, respectively. (3) Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan. During the three and nine months ended September 30, 2018, the Company received distributions totaling $2.8 million and $15.1 million, respectively, from a profit participation in a mortgage loan that was repaid in 2016. The loan was secured by a retail and hospitality property located in the Times Square area of New York City. The profit participation is accounted for as a loan in accordance with the acquisition, development and construction accounting guidance within ASC 310-10, which results in distributions in excess of basis being recognized within interest income in our condensed consolidated statements of operations. As of September 30, 2018, approximately $8.1 billion, or 94.5%, of our loans held-for-investment were variable rate and paid interest principally at LIBOR plus a weighted-average spread of 4.4%. We regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral, as well as the financial and operating capability of the borrower. Specifically, the collateral’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, and/or (iii) the collateral’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 collateral. In addition, we consider the overall economic environment, real estate or industry 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 for commercial loans 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 September 30, 2018, the risk ratings for loans subject to our rating system, which excludes loans held-for-sale, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans First Priority Transferred % of Risk Rating First Infrastructure Subordinated Mezzanine As Secured Total Category Mortgages Loans Mortgages Loans Other Borrowings Total Loans 1 $ 1,433 $ — $ — $ — $ 19,672 $ — $ 21,105 0.2 % 2 2,917,836 — 11,752 118,694 — 74,281 3,122,563 31.4 % 3 3,285,546 — 164,673 233,606 — — 3,683,825 37.1 % 4 78,028 — — — — — 78,028 0.8 % 5 20,667 — — — — — 20,667 0.2 % N/A 170,968 (1) 1,492,276 (2) 11,977 (1) — 5,602 (1) — 1,680,823 16.9 % $ 6,474,478 $ 1,492,276 $ 188,402 $ 352,300 $ 25,274 $ 74,281 8,607,011 Loans held-for-sale 1,326,837 13.4 % Total gross loans $ 9,933,848 100.0 % (1) Represents loans individually evaluated for impairment in accordance with ASC 310-10. (2) First priority infrastructure loans were not risk rated as of September 30, 2018 as the Company is in the process of developing a risk rating policy for these loans. As of December 31, 2017, the risk ratings for loans subject to our rating system, which excludes loans held-for-sale, 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 As Secured Total Category Mortgages Mortgages Loans Other Borrowings Total Loans 1 $ 2,003 $ — $ — $ 20,267 $ — $ 22,270 0.3 % 2 2,462,268 11,927 137,803 — — 2,611,998 35.4 % 3 3,183,592 165,188 407,496 5,340 74,403 3,836,019 51.9 % 4 120,479 — — — — 120,479 1.6 % 5 50,462 — — — — 50,462 0.7 % N/A — — — — — — — % $ 5,818,804 $ 177,115 $ 545,299 $ 25,607 $ 74,403 6,641,228 Loans held-for-sale 745,743 10.1 % Total gross loans $ 7,386,971 100.0 % In accordance with our loan impairment policy, during the three and nine months ended September 30, 2018, we recorded impairment charges of zero and $29.9 million, respectively. Of the $29.9 million impairment charge recorded during the nine months ended September 30, 2018, $21.6 million relates to a residential conversion project located in New York City, for which our recorded investment was as follows as of September 30, 2018: (i) $118.3 million first mortgage loan ($118.5 million unpaid principal balance and $5.5 million provision for impaired loans); (ii) $52.7 million mezzanine loan ($52.8 million unpaid principal balance and $16.1 million provision for impaired loan); and (iii) $5.6 million unsecured promissory note ($5.7 million unpaid principal balance and zero provision for impaired loan). In making our determinations surrounding impairment, we considered the property’s liquidation value, the financial wherewithal of the sponsor, the borrower’s competency in managing and operating the project and the overall economic environment. The remaining $8.3 million of impairment charges recorded during the nine months ended September 30, 2018 relate to two subordinated mortgages on department stores located in the Greater Chicago area. The sole tenant filed bankruptcy earlier this year, and the bankruptcy court ordered liquidation of the retailer during the nine months ended September 30, 2018. In making the determination that the loans were impaired, we considered the property’s liquidation value and the financial wherewithal of the tenant’s parent company to honor certain guarantees. Our recorded investment in these loans totaled $12.2 million ($12.0 million unpaid principal balance and $8.3 million provision for impaired loan). Our September 30, 2018 remeasurement of impairment for these loans did not result in any incremental impairment charges being recognized. However, because these loans were previously determined to be impaired, we continue to apply the cost recovery method of interest income recognition. The average recorded investment in the impaired loans for the three and nine months ended September 30, 2018 was $189.6 million and $188.6 million, respectively. During the three months ended September 30, 2018, we modified certain loans as TDRs, consisting of the mezzanine loan and unsecured promissory note on the residential conversion project discussed above. In the case of the mezzanine loan, the interest rate was modified to a below market interest rate. In the case of the unsecured promissory note, the maturity date was extended, causing a delay in timing that was not insignificant to the debt’s original contractual maturity. As of September 30, 2018, the mezzanine loan was fully funded and the unsecured promissory note had an unfunded commitment of $6.3 million. There were no TDRs for which interest income was recognized during the three or nine months ended September 30, 2018. As of September 30, 2018, the department store loans discussed above were 90 days or greater past due, as were $3.6 million of principally residential loans. In accordance with our interest income recognition policy, these loans were placed on cost recovery once 90 days or greater past due. 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,” plus (iii) impaired loan reserves, if any. The following table presents the activity in our allowance for loan losses (amounts in thousands): For the Nine Months Ended September 30, 2018 2017 Allowance for loan losses at January 1 $ 4,330 $ 9,788 Provision for (reversal of) loan losses (2,127) (3,170) Provision for impaired loans 29,853 — Charge-offs — — Recoveries — — Allowance for loan losses at September 30 $ 32,056 $ 6,618 Recorded investment in loans related to the allowance for loan loss $ 287,242 $ 310,046 The activity in our loan portfolio was as follows (amounts in thousands): For the Nine Months Ended September 30, 2018 2017 Balance at January 1 $ 7,382,641 $ 5,946,274 Acquisition of Infrastructure Lending Portfolio 1,826,423 — Acquisitions/originations/additional funding 5,006,725 3,722,624 Capitalized interest (1) 44,293 55,987 Basis of loans sold (2) (1,985,388) (1,024,964) Loan maturities/principal repayments (2,383,658) (1,742,494) Discount accretion/premium amortization 28,954 27,014 Changes in fair value 26,573 45,484 Unrealized foreign currency translation (loss) gain (17,095) 31,395 Change in loan loss allowance, net (27,726) 3,170 Transfer to/from other asset classifications 50 844 Balance at September 30 $ 9,901,792 $ 7,065,334 (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 | 9 Months Ended |
Sep. 30, 2018 | |
Investment Securities | |
Investment Securities | 5. Investment Securities Investment securities were comprised of the following as of September 30, 2018 and December 31, 2017 (amounts in thousands): Carrying Value as of September 30, 2018 December 31, 2017 RMBS, available-for-sale $ 227,867 $ 247,021 RMBS, fair value option (1) 44,976 — CMBS, fair value option (1) 1,051,039 1,024,143 Held-to-maturity (“HTM”) securities 473,896 433,468 Equity security, fair value 13,098 13,523 Subtotal — Investment securities 1,810,876 1,718,155 VIE eliminations (1) (1,047,426) (999,952) Total investment securities $ 763,450 $ 718,203 (1) Certain fair value option CMBS and RMBS 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): RMBS, RMBS, fair CMBS, fair HTM Equity Securitization available-for-sale value option value option Securities Security VIEs (1) Total Three Months Ended September 30, 2018 Purchases $ — $ 45,095 $ 26,258 $ 289,100 $ — $ (68,579) $ 291,874 Acquisition of Infrastructure Lending Portfolio — — — 65,060 — — 65,060 Sales 2,046 — 22,065 — — (18,902) 5,209 Principal collections 9,246 119 22,031 20,577 — (17,903) 34,070 Three Months Ended September 30, 2017 Purchases $ — $ — $ 30,844 $ 50,000 $ — $ (19,046) $ 61,798 Sales — — 1,469 — — (1,469) — Principal collections 10,307 — 1,666 111,671 — — 123,644 RMBS, RMBS, fair CMBS, fair HTM Equity Securitization available-for-sale value option value option Securities Security VIEs (1) Total Nine Months Ended September 30, 2018 Purchases $ — $ 45,095 $ 118,166 $ 289,100 $ — $ (140,022) $ 312,339 Acquisition of Infrastructure Lending Portfolio — — — 65,060 — — 65,060 Sales 2,853 — 30,012 — — (26,849) 6,016 Principal collections 27,432 119 82,812 323,061 — (77,667) 355,757 Nine Months Ended September 30, 2017 Purchases $ 7,433 $ — $ 92,569 $ 50,000 $ — $ (80,771) $ 69,231 Sales — — 22,791 — — (11,657) 11,134 Principal collections 29,090 — 8,754 172,059 — — 209,903 (1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. RMBS, Available-for-Sale The Company’s RMBS classified as available-for-sale is 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 September 30, 2018 and December 31, 2017 (amounts 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 September 30, 2018 RMBS $ 176,952 $ (9,897) $ 167,055 $ — $ 60,812 $ — $ 60,812 $ December 31, 2017 RMBS $ $ (9,897) $ 189,132 $ (94) $ 58,011 $ (28) $ 57,889 $ Weighted Average Coupon (1) Weighted Average WAL September 30, 2018 RMBS 3.5 % CC+ 5.9 December 31, 2017 RMBS 2.8 % B 6.4 (1) Calculated using the September 30, 2018 and December 31, 2017 one-month LIBOR rate of 2.261% and 1.564%, respectively, for floating rate securities. (2) Represents the remaining 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 September 30, 2018, approximately $194.4 million, or 85.3%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.26%. As of December 31, 2017, approximately $207.0 million, or 83.8%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.22%. We purchased all of the RMBS at a discount, a portion of which is being accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount. The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of September 30, 2018 and December 31, 2017 (amounts in thousands): September 30, 2018 December 31, 2017 Principal balance $ 333,107 $ 366,711 Accretable yield (56,938) (55,712) Non-accretable difference (109,114) (121,867) Total discount (166,052) (177,579) Amortized cost $ 167,055 $ 189,132 The principal balance of credit deteriorated RMBS was $313.8 million and $345.5 million as of September 30, 2018 and December 31, 2017, respectively. Accretable yield related to these securities totaled $51.3 million and $49.2 million as of September 30, 2018 and December 31, 2017, respectively. The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the three and nine months ended September 30, 2018 (amounts in thousands): Non-Accretable Three Months Ended September 30, 2018 Accretable Yield Difference Balance as of July 1, 2018 $ 50,877 $ 118,602 Accretion of discount (2,526) — Principal write-downs, net — (549) Sales (352) — Transfer to/from non-accretable difference 8,939 (8,939) Balance as of September 30, 2018 $ 56,938 $ 109,114 Nine Months Ended September 30, 2018 Balance as of January 1, 2018 $ 55,712 $ 121,867 Accretion of discount (7,967) — Principal write-downs, net — (3,030) Sales (530) — Transfer to/from non-accretable difference 9,723 (9,723) Balance as of September 30, 2018 $ 56,938 $ 109,114 We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $0.4 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, and $1.3 million and $1.4 million for the nine months ended September 30, 2018 and 2017, respectively, 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 September 30, 2018 and December 31, 2017, 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 September 30, 2018 RMBS $ — $ — $ — $ — As of December 31, 2017 RMBS $ 10,321 $ 643 $ (99) $ (23) As of September 30, 2018, there were no securities with unrealized losses. As of December 31, 2017, there were three securities 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 and RMBS, Fair Value Option As discussed in the “Fair Value Option” section of Note 2 herein, we elect the fair value option for certain CMBS and RMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of September 30, 2018, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $1.1 billion and $3.0 billion, respectively. As of September 30, 2018, the fair value and unpaid principal balance of RMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $45.0 million and $27.5 million, respectively. The $1.1 billion total fair value balance of CMBS and RMBS represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value (all except $48.6 million at September 30, 2018) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option investment securities. As of September 30, 2018, $23.5 million of our CMBS were variable rate and none of our RMBS were variable rate. HTM Securities The table below summarizes unrealized gains and losses of our investments in HTM securities as of September 30, 2018 and December 31, 2017 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value September 30, 2018 CMBS $ 408,836 $ 2,582 $ (2,083) $ 409,335 Infrastructure bonds 65,060 — — 65,060 Total $ 473,896 $ 2,582 $ (2,083) $ 474,395 December 31, 2017 CMBS $ $ 2,002 $ (7,779) $ 407,333 Preferred interests 20,358 647 — 21,005 Total $ 433,468 $ 2,649 $ (7,779) $ 428,338 The table below summarizes the maturities of our HTM securities by type as of September 30, 2018 (amounts in thousands): Infrastructure CMBS bonds Total Less than one year $ 75,268 $ — $ 75,268 One to three years 305,311 16,330 321,641 Three to five years 28,257 — 28,257 Thereafter — 48,730 48,730 Total $ 408,836 $ 65,060 $ 473,896 Equity Security, Fair Value 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. The fair value of the investment remeasured in USD was $13.1 million and $13.5 million as of September 30, 2018 and December 31, 2017, respectively. As of September 30, 2018, our shares represent an approximate 2% interest in SEREF. |
Properties
Properties | 9 Months Ended |
Sep. 30, 2018 | |
Properties | |
Properties | 6. Propertie Our properties are held within the following portfolios: Ireland Portfolio The Ireland Portfolio is comprised of 11 net leased fully occupied office properties and one multifamily property all located in Dublin, Ireland, which the Company acquired during the year ended December 31, 2015. The Ireland Portfolio, which collectively is comprised of approximately 600,000 square feet, includes total gross properties and lease intangibles of $526.4 million and debt of $336.6 million as of September 30, 2018. Woodstar I Portfolio The Woodstar I Portfolio is comprised of 32 affordable housing communities with 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. During the year ended December 31, 2015, we acquired 18 of the 32 affordable housing communities of the Woodstar I Portfolio with the final 14 communities acquired during the year ended December 31, 2016. The Woodstar I Portfolio includes total gross properties and lease intangibles of $622.2 million and federal, state and county sponsored financing and other debt of $407.7 million as of September 30, 2018. Woodstar II Portfolio The Woodstar II Portfolio is comprised of 27 affordable housing communities with 6,109 units concentrated primarily in Central and South Florida. The Woodstar II Portfolio includes total gross properties and lease intangibles of $559.9 million and debt of $439.0 million as of September 30, 2018. Refer to Note 3 for further discussion of the Woodstar II Portfolio. Medical Office Portfolio The Medical Office Portfolio is comprised of 34 medical office buildings acquired during the year ended December 31, 2016. These properties, which collectively comprise 1.9 million square feet, are geographically dispersed throughout the U.S. and primarily affiliated with major hospitals or located on or adjacent to major hospital campuses. The Medical Office Portfolio includes total gross properties and lease intangibles of $760.2 million and debt of $484.1 million as of September 30, 2018. Master Lease Portfolio The Master Lease Portfolio is comprised of 17 retail properties and three industrial properties geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Utah, Florida, Texas and Minnesota. These properties collectively comprise 5.0 million square feet and were leased back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. The Master Lease Portfolio includes total gross properties of $505.0 million and debt of $262.1 million as of September 30, 2018. Investing and Servicing Segment Property Portfolio The REIS Equity Portfolio is comprised of 22 commercial real estate properties and one equity interest in an unconsolidated commercial real estate property. The REIS Equity Portfolio includes total gross properties and lease intangibles of $367.3 million and debt of $225.3 million as of September 30, 2018. Refer to Note 3 for further discussion of the REIS Equity Portfolio. The table below summarizes our properties held-for-investment as of September 30, 2018 and December 31, 2017 (dollars in thousands): Depreciable Life September 30, 2018 December 31, 2017 Property Segment Land and land improvements 0 – 15 years $ 663,448 $ 585,915 Buildings and building improvements 5 – 45 years 2,059,383 1,838,266 Furniture & fixtures 3 – 7 years 44,458 31,028 Investing and Servicing Segment Land and land improvements 0 – 15 years 82,332 86,711 Buildings and building improvements 3 – 40 years 206,643 212,094 Furniture & fixtures 2 – 5 years 1,871 1,036 Properties, cost 3,058,135 2,755,050 Less: accumulated depreciation (169,398) (107,569) Properties, net $ 2,888,737 $ 2,647,481 During the three and nine months ended September 30, 2018, we sold one and nine operating properties for $8.7 million and $104.3 million, respectively, recognizing a gain on sale of $1.4 million and $25.1 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. One of these properties sold in March 2018 was acquired by a third party which already held a $0.3 million non-controlling interest in the property. During the nine months ended September 30, 2018, $3.7 million of the gain on sale was attributable to non-controlling interests. None of the gain on sale was attributable to non-controlling interests during the three months ended September 30, 2018. During the three and nine months ended September 30, 2017, we sold two and five operating properties for $26.0 million and $44.6 million, respectively, recognizing a gain on sale of $11.2 million and $16.4 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. As of September 30, 2018, one property within the Master Lease Portfolio with a carrying value of $31.9 million and three properties within the REIS Equity Portfolio with an aggregate carrying value of $20.4 million were reclassified from held-for-investment to held-for-sale. The properties are expected to be sold during the three months ended December 31, 2018. A loss of $1.5 million was recognized within other loss in our condensed consolidated statement of operations for the three and nine months ended September 30, 2018 relating to one of the REIS Equity Portfolio properties which was written down to its contracted sale price less expected costs to sell upon reclassification to held-for-sale. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 9 Months Ended |
Sep. 30, 2018 | |
Investment in Unconsolidated Entities | |
Investment in Unconsolidated Entities | 7. Investment in Unconsolidated Entities The table below summarizes our investment in unconsolidated entities as of September 30, 2018 and December 31, 2017 (dollars in thousands): Participation / Carrying value as of Ownership % (1) September 30, 2018 December 31, 2017 Equity method: Retail Fund 33% $ 112,110 $ 110,704 Investor entity which owns equity in an online real estate company 50% 9,363 9,312 Equity interests in commercial real estate 50% 6,507 (2) 23,192 Equity interest in and advances to a residential mortgage originator N/A 8,996 (3) 7,742 Various 25% - 50% 6,127 3,538 143,103 154,488 Cost method: Equity interest in a servicing and advisory business 6% 6,207 12,234 Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% 9,225 9,225 Various 0% - 3% 10,253 9,556 25,685 31,015 $ 168,788 $ 185,503 (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) In March 2018, our preferred equity investment in a portfolio of student housing properties was redeemed in full for cash proceeds of $16.7 million. (3) Includes a $2.0 million subordinated loan the Company funded in June 2018. Refer to Note 15 for further discussion. As of September 30, 2018, the carrying value of our equity investment in a residential mortgage originator exceeded the underlying equity in net assets of such investee by $1.6 million. This difference is the result of the Company recording its investment in the investee at its acquisition date fair value, which included certain non-amortizing intangible assets not recognized by the investee. Should the Company determine these intangible assets held by the investee are impaired, the Company will recognize such impairment loss through earnings from unconsolidated entities in our consolidated statement of operations, otherwise, such difference between the carrying value of our equity investment in the residential mortgage originator and the underlying equity in the net assets of the residential mortgage originator will continue to exist. Other than our equity interest in the residential mortgage originator, 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 September 30, 2018. During the three and nine months ended September 30, 2018, we did not become aware of any observable price changes in our cost method investments that are within the scope of ASU 2016-01 or any indicators of impairment. |
Goodwill and Intangibles
Goodwill and Intangibles | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangibles | |
Goodwill and Intangibles | 8. Goodwil Goodwill Infrastructure Lending Segment Infrastructure Lending Segment goodwill of $116.0 million at September 30, 2018 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment’s origination platform and is fully tax deductible over 15 years. LNR Property LLC (“LNR”) Investing and Servicing Segment goodwill of $140.4 million at both September 30, 2018 and December 31, 2017 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes a 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 servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. At September 30, 2018 and December 31, 2017 the balance of the domestic servicing intangible was net of $22.8 million and $28.2 million, respectively, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of September 30, 2018 and December 31, 2017, the domestic servicing intangible had a balance of $44.6 million and $59.0 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 non-cancelable 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 September 30, 2018 and December 31, 2017 (amounts in thousands): As of September 30, 2018 As of December 31, 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ 21,768 $ — $ 21,768 $ 30,759 $ — $ 30,759 In-place lease intangible assets 198,814 (94,761) 104,053 187,816 (65,351) 122,465 Favorable lease intangible assets 37,039 (8,912) 28,127 37,231 (7,363) 29,868 Total net intangible assets $ 257,621 $ (103,673) $ 153,948 $ 255,806 $ (72,714) $ 183,092 The following table summarizes the activity within intangible assets for the nine months ended September 30, 2018 (amounts in thousands): Domestic In-place Lease Favorable Lease Servicing Intangible Intangible Rights Assets Assets Total Balance as of January 1, 2018 $ 30,759 $ 122,465 $ 29,868 $ 183,092 Acquisition of additional Woodstar II Portfolio properties — 10,792 — 10,792 Acquisition of additional REIS Equity Portfolio properties — 7,342 2,687 10,029 Amortization — (33,458) (3,138) (36,596) Sales — (1,041) (953) (1,994) Foreign exchange loss — (936) (254) (1,190) Impairment (1) — (361) — (361) Changes in fair value due to changes in inputs and assumptions (8,991) — — (8,991) Transfers to properties held-for-sale — (750) (83) (833) Balance as of September 30, 2018 $ 21,768 $ 104,053 $ 28,127 $ 153,948 (1) Impairment of intangible lease assets is recognized within other expense in our condensed consolidated statements of operations. The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands): 2018 (remainder of) $ 7,308 2019 23,323 2020 17,547 2021 15,099 2022 12,286 Thereafter 56,617 Total $ 132,180 |
Secured Financing Agreements
Secured Financing Agreements | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 (dollars in thousands): Carrying Value at Current Extended Pledged Asset Maximum September 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2018 2017 Lender 1 Repo 1 (b) (b) LIBOR + 1.60% to 5.75% $ 1,703,978 $ $ 1,303,966 $ 1,137,654 Lender 2 Repo 1 Apr 2020 Apr 2023 LIBOR + 1.50% to 2.35% 322,291 900,000 (c) 243,100 238,428 Lender 3 Repo 1 N/A N/A N/A — — — 75,291 Lender 4 Repo 2 May 2021 May 2023 LIBOR + 2.00% to 3.25% 964,155 401,592 215,372 Lender 6 Repo 1 Aug 2021 N/A LIBOR + 2.00% to 2.75% 654,464 600,000 507,545 494,353 Lender 6 Repo 2 Oct 2022 Oct 2023 GBP LIBOR + 2.75%, EURIBOR + 2.25% 515,755 431,056 403,685 332,815 Lender 7 Repo 1 Sep 2021 Sep 2023 LIBOR + 1.75% to 2.25% — 250,000 — — Lender 9 Repo 1 N/A N/A N/A — — — 65,762 Lender 10 Repo 1 May 2021 May 2023 LIBOR + 1.50% to 2.75% 200,425 164,840 160,480 77,800 Lender 11 Repo 1 Jun 2019 Jun 2020 LIBOR + 2.75% — 200,000 — — Lender 11 Repo 2 Sep 2019 Sep 2023 LIBOR + 2.00% to 2.75% 355,451 500,000 270,690 — Lender 12 Repo 1 Jun 2021 Jun 2024 LIBOR + 2.10% to 2.45% 57,322 250,000 43,500 — Lender 13 Repo 1 (d) (d) LIBOR + 1.50% 18,407 200,000 14,824 — Lender 7 Secured Financing Feb 2021 Feb 2023 LIBOR + 2.25% (e) 353,449 650,000 (f) 159,453 — Lender 8 Secured Financing Aug 2019 N/A LIBOR + 4.00% — — — 15,617 Conduit Repo 2 Nov 2018 Nov 2019 LIBOR + 2.25% 122,728 200,000 94,600 40,075 Conduit Repo 3 Feb 2020 Feb 2021 LIBOR + 2.10% 125,108 150,000 94,508 26,895 MBS Repo 1 (g) (g) N/A — — — 6,510 MBS Repo 2 Sep 2020 N/A LIBOR + 1.65% to 2.25% 100,526 69,777 69,777 222,672 MBS Repo 3 (h) (h) LIBOR + 1.32% to 1.85% 752,458 365,812 365,812 224,150 MBS Repo 4 (i) N/A LIBOR + 1.70% 163,558 110,000 25,000 77,318 MBS Repo 5 Jun 2028 Dec 2028 4.14% 25,585 150,000 24,721 — Investing and Servicing Segment Property Mortgages Dec 2018 to N/A Various 244,184 218,019 203,165 177,411 Ireland Mortgage May 2020 N/A EURIBOR + 1.69% 468,926 338,525 338,525 349,900 Woodstar I Mortgages Nov 2025 to N/A 3.72% to 3.97% 361,415 276,748 276,748 276,748 Woodstar I Government Financing Mar 2026 to Jun 2049 N/A 1.00% to 5.00% 302,061 131,746 131,746 133,418 Woodstar II Mortgages Jan 2028 to Apr 2028 N/A 3.81% to 3.85% 505,079 417,669 417,669 116,745 Woodstar II Government Financing Jun 2030 to Aug 2052 N/A 1.00% to 3.19% 161,987 27,018 27,018 — Medical Office Mortgages Dec 2021 Dec 2023 LIBOR + 2.50% 687,921 524,499 491,197 497,613 Master Lease Mortgages Oct 2027 N/A 4.36% to 4.38% 459,504 265,900 265,900 265,900 Infrastructure Lending Facility Sep 2021 Sep 2022 Various 1,877,606 2,127,267 1,536,477 — Term Loan A Dec 2020 Dec 2021 LIBOR + 2.25% (e) 918,342 300,000 300,000 300,000 Revolving Secured Financing Dec 2020 Dec 2021 LIBOR + 2.25% (e) — 100,000 — — FHLB Feb 2021 N/A Various 719,781 500,000 500,000 445,000 $ 13,142,466 $ 8,671,698 5,813,447 Unamortized net premium 495 2,559 Unamortized deferred financing costs (85,506) (42,950) $ 8,586,687 $ 5,773,056 (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans is September 2019 with an additional extension option to September 2021. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions and not to exceed September 2025. (c) The initial maximum facility size of $600.0 million may be increased to $900.0 million, subject to certain conditions. (d) Maturity date for borrowings collateralized by loans is May 2020 with an additional extension option to August 2021. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions. (e) Subject to borrower’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. (f) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (g) Facility carries a rolling 11-month term which may reset monthly with the lender’s consent. This facility carries no maximum facility size. (h) Facility carries a rolling 12-month term which may reset monthly with the lender’s consent. Current maturity is September 2019. This facility carries no maximum facility size. Amounts reflect the outstanding balance as of September 30, 2018. (i) The date that is 270 days after the buyer delivers notice to seller, subject to a maximum date of May 2020. 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 nine months ended September 30, 2018, we entered into two mortgage loans with aggregate maximum borrowings of $34.8 million to finance commercial real estate previously acquired by our Investing and Servicing Segment. As of September 30, 2018, these facilities carry a remaining weighted average term of 3.7 years with floating annual interest rates of LIBOR +2.62%. During the nine months ended September 30, 2018, we entered into mortgage loans with total borrowings of $300.9 million to finance the Q1 2018 Closing of our Woodstar II Portfolio. The loans carry 10-year terms and weighted average fixed annual interest rates of 3.82%. Additional government sponsored mortgage loans of $27.0 million with weighted average fixed annual interest rates of 3.06% and remaining weighted average terms of 27.5 years were assumed at in connection with the Q1 2018 and Q3 2018 Closings of our Woodstar II Portfolio. In April 2018, we amended the Lender 2 Repo 1 facility to extend the current maturity from October 2018 to April 2020 with three one-year extension options and allow for the option to upsize to $900.0 million, subject to certain conditions. In June 2018, we entered into a $150.0 million repurchase facility (“MBS Repo 5”) to finance vertical risk retention CMBS investments within our Investing and Servicing Segment. The facility carries a ten-year initial term with a six-month extension option. In June 2018, we entered into a $250.0 million repurchase facility (“Lender 12 Repo 1”) to finance certain loans held-for-investment. The facility carries a three-year initial term with three one-year extension options and an annual interest rate of LIBOR + 2.10% to 2.45%, subject to a 25 basis point floor. In August 2018, we entered into a $200.0 million repurchase facility (“Lender 13 Repo 1”) to finance certain loans held-for-investment. The facility has a maturity date of May 2020 with an additional extension option to August 2021 and an annual interest rate of LIBOR + 1.50%. In August and September 2018, we amended the Lender 11 Repo 2 facility to increase available borrowings from $250.0 million to $500.0 million, extend the current maturity from September 2018 to September 2019 with four one-year extension options and decrease the pricing margin from LIBOR + 2.25% to 2.75% to LIBOR + 2.00% to 2.75%. In September 2018, we exercised an option to upsize the Lender 4 Repo 2 facility from $600.0 million to $1.0 billion. In September 2018, we entered into a $250.0 million repurchase facility (“Lender 7 Repo 1”) to finance certain loans held-for-investment. The facility carries a three-year initial term with two one-year extension options and an annual interest rate of LIBOR + 1.75% to 2.25%. In September 2018, we entered into a credit agreement to fund the acquisition and unfunded loan commitments associated with the Infrastructure Lending Segment (the “Infrastructure Lending Facility”) which consists of the following components: (i) a $1.5 billion term loan for fully funded loans; (ii) a $334.0 million delayed draw term loan for future fundings on acquired term loans; and (iii) a $286.9 million revolver for future fundings on acquired revolvers and letters of credit (“LCs”). Each component carries a three-year initial term with a one-year extension option and an annual interest rate of the applicable currency benchmark index + 1.50%. The spread increases 25 bps in each of the second and third years of the facility. The facility also contains commitment fees, including fees paid at inception and ongoing fees associated with unfunded commitments on delayed draw term loans, revolvers and LCs. As of September 30, 2018, the following components were outstanding: (i) $1.5 billion of term loans; and (ii) $30.1 million of revolvers. Subsequent to September 30, 2018, on October 3, 2018, in accordance with an advance rate adjustment contemplated by the original terms of the Infrastructure Lending Facility, we paid down $62.5 million of the outstanding balance, all of which related to term loans. Our secured financing agreements contain certain financial tests and covenants. As of September 30, 2018, 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 2018 (remainder of) $ 197,287 $ 30,848 $ 228,135 2019 464,418 291,250 755,668 2020 594,641 649,594 1,244,235 2021 872,114 840,693 1,712,807 2022 804,939 981,724 1,786,663 Thereafter 1,090,401 1,853,789 2,944,190 Total $ 4,023,800 $ 4,647,898 $ 8,671,698 For the three and nine months ended September 30, 2018, approximately $6.6 million and $17.5 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 nine months ended September 30, 2017, approximately $5.0 million and $14.4 million, respectively, of amortization of deferred financing costs from secured financing agreements 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 September 30, 2018 and December 31, 2017 (amounts in thousands): Class of Collateral September 30, 2018 December 31, 2017 Loans held-for-investment $ 3,349,382 $ 2,637,475 Loans held-for-sale 189,108 66,970 Investment securities 485,310 530,650 $ 4,023,800 $ 3,235,095 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 74% 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 28% 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. |
Unsecured Senior Notes
Unsecured Senior Notes | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | |
Unsecured Senior Notes | |
Unsecured Senior Notes | 10. Unsecured Senior Notes The following table is a summary of our unsecured senior notes outstanding as of September 30, 2018 and December 31, 2017 (dollars in thousands): Remaining Coupon Effective Maturity Period of Carrying Value at Rate Rate (1) Date Amortization September 30, 2018 December 31, 2017 2018 Convertible Notes N/A N/A N/A N/A — 369,981 2019 Convertible Notes 4.00 % 5.74 % 1/15/2019 years 105,908 341,363 2021 Senior Notes (February) 3.63 % 3.89 % 2/1/2021 years 500,000 — 2021 Senior Notes (December) 5.00 % 5.32 % 12/15/2021 years 700,000 700,000 2023 Convertible Notes 4.38 % 4.86 % 4/1/2023 years 250,000 250,000 2025 Senior Notes 4.75 % 5.04 % 3/15/2025 years 500,000 500,000 Total principal amount 2,055,908 2,161,344 Unamortized discount—Convertible Notes (5,194) (11,186) Unamortized discount—Senior Notes (17,454) (16,654) Unamortized deferred financing costs (8,690) (8,269) Carrying amount of debt components $ 2,024,570 $ 2,125,235 Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes $ 3,755 $ 31,638 (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our convertible senior notes, the value of which reduced the initial liability and was recorded in additional paid‑in capital. Senior Notes On January 29, 2018, we issued $500.0 million of 3.625% Senior Notes due 2021 (the “2021 February Notes”). The 2021 February Notes mature on February 1, 2021. Prior to November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof. In addition, prior to February 1, 2020, we may redeem up to 40% of the 2021 February Notes at the applicable redemption price using the proceeds of certain equity offerings. The 2021 February Notes were swapped to floating rate (see Note 12). Convertible Senior Notes In March 2018, we repaid the full outstanding principal amount of the 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”) in cash upon their maturity. During the three months ended September 30, 2018, we received redemption notices related to the 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”) with a par amount totaling $263.4 million, of which $235.5 million were settled during the three months ended September 30, 2018 for total consideration of $266.0 million, which was paid via the issuance of 11.2 million shares and cash payments of $20.8 million. The $236.2 million of settlement consideration attributable to the liability component of the 2019 Notes exceeded the proportionate net carrying amount of the liability component by $1.8 million, which was recognized as a loss on extinguishment of debt in our condensed consolidated statement of operations for the three months ended September 30, 2018. The $29.8 million of settlement consideration attributable to the equity component of the 2019 Notes was recognized as a reduction of additional paid-in capital in our condensed consolidated statement of equity for the three months ended September 30, 2018, partially offsetting the $245.2 million fair value of the shares issued. Subsequent to September 30, 2018, an additional $27.9 million of these redemptions were settled through the issuance of 1.2 million shares and cash payments totaling $4.7 million. We recognized interest expense of $5.9 million and $24.8 million during the three and nine months ended September 30, 2018, respectively, from our unsecured convertible senior notes. We recognized interest expense of $19.3 million and $58.0 million during the three and nine months ended September 30, 2017, respectively, from our unsecured convertible senior notes. On March 29, 2017, we issued $250.0 million of 4.375% Convertible Senior Notes due 2023 (the “2023 Notes”). The proceeds from the issuance of the 2023 Notes were used to repurchase $230.0 million of the 2018 Notes for $250.7 million. The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the 2018 Notes at the repurchase date. The portion of the repurchase price attributable to the equity component totaled $18.1 million and was recognized as a reduction of additional paid-in capital during the nine months ended September 30, 2017. The portion of the repurchase price attributable to the liability component exceeded the net carrying amount of the liability component by $5.9 million, which was recognized as a loss on extinguishment of debt in our condensed consolidated statement of operations for the nine months ended September 30, 2017. The following table details the conversion attributes of our Convertible Notes outstanding as of September 30, 2018 (amounts in thousands, except rates): September 30, 2018 Conversion Spread Value - Shares (3) Conversion Conversion For the Three Months Ended September 30, For the Nine Months Ended September 30, Rate (1) Price (2) 2018 2017 2018 2017 2018 Notes N/A N/A — 742 — 733 2019 Notes 51.7349 $ 19.33 542 1,571 559 1,551 2023 Notes 38.5959 $ 25.91 — — — — 542 2,313 559 2,284 (1) 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). (2) As of September 30, 2018 and 2017, the market price of the Company’s common stock was $21.52 and $21.72 per share, respectively. (3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion. The if-converted value of the 2019 Notes exceeded their principal amount by $12.0 million at September 30, 2018 as the closing market price of the Company’s common stock of $21.52 per share exceeded the implicit conversion price of $19.33 per share. However, the if‑converted value of the 2023 Notes was less than their principal amount by $42.4 million at September 30, 2018 as the closing market price of the Company’s common stock was less than the implicit conversion price of $25.91 per share. Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. The if-converted value of the principal amount of the 2019 Notes and 2023 Notes was $117.9 million and $207.6 million, respectively, as of September 30, 2018. |
Loan Securitization_Sale Activi
Loan Securitization/Sale Activities | 9 Months Ended |
Sep. 30, 2018 | |
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. Conduit Loan Securitizations 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 by third parties. In certain instances, we retain an interest in the VIE and/or 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 nine months ended September 30, 2018 and 2017 (amounts in thousands): Repayment of repurchase Face Amount Proceeds agreements For the Three Months Ended September 30, 2018 $ 360,651 $ 372,300 $ 272,156 2017 498,022 517,351 376,687 For the Nine Months Ended September 30, 2018 $ 825,610 $ 854,065 $ 623,538 2017 938,879 987,828 709,666 Securitization Financing Arrangements and Sales Within the Commercial and Residential Lending Segment, we originate or acquire residential and commercial mortgage loans, subsequently selling all or a portion thereof. 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. These loans may be sold directly or through a securitization. In certain instances, we continue to act as servicer, special servicer or servicing administrator for the loan following its sale. In these instances, similar to the strategy of our Investing and Servicing Segment described above, we consolidate the underlying VIE into which the loans were sold. During the three months ended September 30, 2018, we consolidated the securitization VIE into which our residential loans were sold, along with a securitization VIE into which one of our commercial loans was sold. In each of these instances, we retained an interest in the VIE. The following table summarizes our loans sold and loans transferred as secured borrowings by the Commercial and Residential Lending Segment net of expenses (amounts in thousands): Loan Transfers Loan Transfers Accounted for as Sales Accounted for as Secured Commercial Residential Borrowings Face Amount Proceeds Face Amount Proceeds Face Amount Proceeds For the Three Months Ended September 30, 2018 $ 550,000 $ 547,776 $ 374,071 $ 389,044 $ — $ — 2017 — — — — 75,000 74,200 For the Nine Months Ended September 30, 2018 $ 746,400 $ 742,496 $ 374,071 $ 389,044 $ — $ — 2017 38,750 37,079 — — 75,000 74,200 During the three and nine months ended September 30, 2018, a gain of $2.4 million was recognized within change in fair value of mortgage loans held-for-sale, net in our condensed consolidated statements of operations in connection with a residential mortgage loan securitization. During the three and nine months ended September 30, 2018 and 2017, gains (losses) recognized by the Commercial and Residential Lending Segment on sales of loans held-for-investment were not material. Our securitizations have each been structured as bankruptcy-remote entities whose assets are not intended to be available to the creditors of any other party. |
Derivatives and Hedging Activit
Derivatives and Hedging Activity | 9 Months Ended |
Sep. 30, 2018 | |
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 The Company does not generally elect to apply the hedge accounting designation to its hedging instruments. During the three and nine months ended September 30, 2018, the Company’s only designated hedges were comprised of one and two outstanding interest rate swaps, respectively, that have been designated as cash flow hedges of the interest rate risk associated with forecasted interest payments. As of September 30, 2018, the fair value of the one remaining cash flow hedge was not material. Additionally, during the three and nine months ended September 30, 2018 and 2017 the impact of these cash flow hedges on our net income was not material and we did not recognize any hedge ineffectiveness in earnings associated with these cash flow hedges. Non-designated Hedges and Derivatives The Company has entered into the following types of non-designated hedges and derivatives: · Foreign exchange (“Fx”) forwards whereby we agree to buy or sell a specified amount of foreign currency for a specified amount of USD at a future date, economically fixing the USD amounts of foreign denominated cash flows we expect to receive or pay related to certain foreign denominated loan investments and properties; · Interest rate contracts which hedge a portion of our exposure to changes in interest rates; · Credit index instruments which hedge a portion of our exposure to the credit risk of our commercial loans held-for-sale; · Forward loan purchase commitments whereby we agree to buy a specified amount of residential mortgage loans at a future date for a specified price and the counterparty is contractually obligated to deliver such mortgage loans (see Note 21); and · Interest rate swap guarantees whereby we guarantee the interest rate swap obligations of certain Infrastructure Lending borrowers. Our interest rate swap guarantees were assumed in connection with the acquisition of the Infrastructure Lending Segment. The following table summarizes our non-designated derivatives as of September 30, 2018 (notional amounts in thousands): Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity Fx contracts – Sell Euros ("EUR") 56 292,826 EUR November 2018 – October 2022 Fx contracts – Sell Pounds Sterling ("GBP") 148 250,899 GBP October 2018 – October 2022 Fx contracts – Sell Canadian dollar ("CAD") 16 9,055 CAD January 2019 – October 2022 Fx contracts – Sell Australian dollar ("AUD") 4 8,122 AUD January 2019 – October 2019 Fx contracts – Buy EUR 1 2,166 EUR October 2018 Fx contracts – Buy GBP 3 7,589 GBP October 2018 – July 2019 Fx contracts – Buy CAD 1 1,103 CAD October 2018 Fx contracts – Buy AUD 1 1,064 AUD October 2018 Interest rate swaps – Paying fixed rates 45 1,238,520 USD April 2019 – October 2028 Interest rate swaps – Receiving fixed rates 2 970,000 USD January 2021 – March 2025 Interest rate caps 2 294,000 EUR May 2020 Interest rate caps 10 126,979 USD November 2018 – October 2021 Credit index instruments 9 74,000 USD November 2054 – November 2059 Forward loan purchase commitments 1 25,000 USD November 2018 Interest rate swap guarantees 11 730,356 USD March 2019 – June 2025 Interest rate swap guarantees 1 11,930 GBP December 2024 Interest rate swap guarantees 1 92,699 CAD June 2045 Total 312 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 September 30, 2018 and December 31, 2017 (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 September 30, December 31, September 30, December 31, 2018 2017 2018 2017 Derivatives designated as hedging instruments: Interest rate swaps $ 1 $ 25 $ — $ — Total derivatives designated as hedging instruments 1 25 — — Derivatives not designated as hedging instruments: Interest rate contracts 52,760 27,234 29,560 2,781 Interest rate swap guarantees — — 282 — Foreign exchange contracts 7,046 6,400 5,390 33,419 Credit index instruments — 239 154 — Total derivatives not designated as hedging instruments 59,806 33,873 35,386 36,200 Total derivatives $ 59,807 $ 33,898 $ 35,386 $ 36,200 (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 nine months ended September 30, 2018 and 2017 (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 September 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2018 $ — $ 6 $ — Interest expense 2017 $ (3) $ 19 $ — Interest expense For the Nine Months Ended September 30, 2018 $ 8 $ 32 $ — Interest expense 2017 $ 45 $ (11) $ — 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 September 30, Nine Months Ended September 30, as Hedging Instruments Recognized in Income 2018 2017 2018 2017 Interest rate contracts Gain (loss) on derivative financial instruments $ 4,444 $ (3,836) $ 10,553 $ (10,190) Foreign exchange contracts Gain (loss) on derivative financial instruments 8,073 (19,650) 17,748 (54,814) Credit index instruments Gain (loss) on derivative financial instruments (782) (738) (803) (1,155) $ 11,735 $ (24,224) $ 27,498 $ (66,159) |
Offsetting Assets and Liabiliti
Offsetting Assets and Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 Derivative assets $ 59,807 $ — $ 59,807 $ 4,387 $ — $ 55,420 Derivative liabilities $ 35,386 $ — $ 35,386 $ 4,387 $ 30,185 $ 814 Repurchase agreements 4,023,800 — 4,023,800 4,023,800 — — $ 4,059,186 $ — $ 4,059,186 $ 4,028,187 $ 30,185 $ 814 As of December 31, 2017 Derivative assets $ 33,898 $ — $ 33,898 $ 6,523 $ — $ 27,375 Derivative liabilities $ 36,200 $ — $ 36,200 $ 6,523 $ 15,333 $ 14,344 Repurchase agreements 3,235,095 — 3,235,095 3,235,095 — — $ 3,271,295 $ — $ 3,271,295 $ 3,241,618 $ 15,333 $ 14,344 |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2018 | |
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, RMBS 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 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. We also hold controlling interests in non-securitization entities that are considered VIEs, most of which were established to facilitate the acquisition of certain properties. SPT Dolphin, the entity which holds the Woodstar II Portfolio, is a VIE because the third party interest holders do not carry kick-out rights or substantive participating rights. We were deemed to be the primary beneficiary of the VIE because we possess both the power to direct the activities of the VIE that most significantly impact its economic performance and a significant economic interest in the entity. This VIE had assets of $693.6 million and liabilities of $447.3 million as of September 30, 2018. In total, our consolidated non-securitization VIEs had assets of $801.3 million and liabilities of $531.4 million as of September 30, 2018. 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 servicing administrator 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 September 30, 2018, two of our CDO structures were in default or imminent 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 September 30, 2018, neither of these CDO structures were 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 September 30, 2018, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $48.6 million on a fair value basis. As of September 30, 2018, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances, excluding the notional value of interest-only securities, of $9.8 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations. We also hold passive non-controlling interests in certain unconsolidated entities that are 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 report our interests, which totaled $130.3 million as of September 30, 2018, 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. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related-Party Transactions | |
Related-Party Transactions | 15. Related-Party Transaction 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. In February 2018, our board of directors authorized an amendment to our Management Agreement to adjust the calculation of the base management fee and incentive fee to treat equity securities of subsidiaries issued in exchange for properties or interests therein as issued common stock, effective December 28, 2017 (the “Amendment”). Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of the Amendment. Base Management Fee. For the three months ended September 30, 2018 and 2017, approximately $18.4 million and $16.9 million, respectively, was incurred for base management fees. For the nine months ended September 30, 2018 and 2017, approximately $53.9 million and $50.7 million, respectively, was incurred for base management fees. As of September 30, 2018 and December 31, 2017, there were $18.4 million and $17.1 million, respectively, of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets. Incentive Fee. For the three months ended September 30, 2018 and 2017, approximately $4.3 million and $10.4 million, respectively, was incurred for incentive fees. For the nine months ended September 30, 2018 and 2017, approximately $19.6 million and $20.2 million, respectively, was incurred for incentive fees. As of September 30, 2018 and December 31, 2017, approximately $4.3 million and $22.0 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 September 30, 2018 and 2017, approximately $1.9 million and $1.7 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the nine months ended September 30, 2018 and 2017, approximately $5.9 million and $4.5 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of September 30, 2018 and December 31, 2017, approximately $2.6 million and $3.3 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 September 30, 2018 and 2017, there were no RSAs granted. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.8 million and $0.7 million during the three months ended September 30, 2018 and 2017, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the nine months ended September 30, 2018 and 2017, we granted 189,813 and 138,264 RSAs, respectively, at grant date fair values of $4.0 million and $3.1 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $2.1 million during both the nine months ended September 30, 2018 and 2017. These shares generally vest over a three-year period. Manager Equity Plan In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”) which replaced the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In April 2018, we granted 775,000 RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 1,000,000 RSUs to our Manager under the Manager Equity Plan. In May 2015, we granted 675,000 RSUs to our Manager under the Manager Equity Plan. In connection with these grants and prior similar grants, we recognized share-based compensation expense of $3.2 million and $3.0 million within management fees in our condensed consolidated statements of operations for the three months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018 and 2017, we recognized $9.4 million and $7.4 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants. Investments in Loans and Securities In January 2018, the Company acquired a $130.0 million first mortgage participation from an unaffiliated third party, which bears interest at LIBOR plus 4.00%. The loan is secured by four U.S. power plants that each have long-term power purchase agreements with investment grade counterparties. The borrower is an affiliate of our Manager. In February 2018, a GBP denominated first mortgage loan that we had co-originated with SEREF in November 2013, which was secured by Centre Point, an iconic tower located in Central London, England, was repaid in full. In March 2018, the Company acquired a €55.0 million newly-originated loan participation from SEREF, which is secured by a luxury resort in Estepona, Spain. In June 2018, a subordinate CMBS investment in a securitization issued by an affiliate of our Manager was paid off in full. We acquired the security, which was secured by five regional malls in Ohio, California and Washington, for $84.1 million in December 2013. In January 2016, we acquired an additional $9.7 million of this subordinate CMBS investment. During the three and nine months ended September 30, 2018, the Company acquired $36.4 million and $80.8 million, respectively, of loans held-for-sale from a residential mortgage originator in which it holds an equity interest. Also in June 2018, the Company originated a $2.0 million subordinated loan to this residential mortgage originator which carries an 8% fixed interest rate and matures in September 2019. Refer to Note 7 for further discussion. Acquisitions from Consolidated CMBS Trusts Our Investing and Servicing Segment acquires interests in properties for its REIS Equity 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. No real estate assets were acquired from consolidated CMBS trusts during the three months ended September 30, 2018 and 2017. During the nine months ended September 30, 2018 and 2017, we acquired $27.7 million and $19.7 million, respectively, of net real estate assets from consolidated CMBS trusts for a gross purchase price of $28.0 million and $19.9 million, respectively. Refer to Note 3 for further discussion of these acquisitions. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements. |
Stockholders' Equity and Non-Co
Stockholders' Equity and Non-Controlling Interests | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity and Non-Controlling Interests | |
Stockholders’ Equity and Non-Controlling Interests | 16. Stockholders’ Equity During the nine months ended September 30, 2018 our board of directors declared the following dividends: Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency 8/8/18 9/28/18 9/26/18 10/15/18 $ 0.48 Quarterly 5/4/18 6/29/18 6/27/18 7/13/18 $ 0.48 Quarterly 2/28/18 3/30/18 3/28/18 4/13/18 $ 0.48 Quarterly During the three months ended September 30, 2018, we issued 11.2 million shares in connection with the settlement of $235.5 million of our 2019 Notes. Refer to Note 10 for further discussion. During the nine months ended September 30, 2018 and 2017, there were no shares issued under our At-The-Market Equity Offering Sales Agreement. During the nine months ended September 30, 2018 and 2017, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) were not material. In February 2017, our board of directors extended the term of our $500.0 million common stock and Convertible Note repurchase program through January 2019. Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further information regarding the repurchase program. During the nine months ended September 30, 2018, we repurchased 573,255 shares of common stock for $12.1 million and no Convertible Notes under our repurchase program. There were no share or Convertible Notes repurchases under the repurchase program during the nine months ended September 30, 2017. The repurchase of the 2018 Notes discussed in Note 10 was not considered part of the repurchase program and therefore did not reduce our available capacity for future repurchases under the repurchase program. As of September 30, 2018, we had $250.1 million of remaining capacity to repurchase common stock and/or Convertible Notes under the repurchase program. Equity Incentive Plans In May 2017, the Company’s shareholders approved the 2017 Manager Equity Plan and the Starwood Property Trust, Inc. 2017 Equity Plan (the “2017 Equity Plan”), which allow for the issuance of up to 11,000,000 stock options, stock appreciation rights, RSAs, RSUs or other equity-based awards or any combination thereof to the Manager, directors, employees, consultants or any other party providing services to the Company. The 2017 Manager Equity Plan succeeds and replaces the Manager Equity Plan and the 2017 Equity Plan succeeds and replaces the Starwood Property Trust, Inc. Equity Plan (the “Equity Plan”) and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (the “Non-Executive Director Stock Plan”). The table below summarizes our share awards granted or vested under the Manager Equity Plan and 2017 Manager Equity Plan during the nine months ended September 30, 2018 and 2017 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period April 2018 RSU 775,000 $ 16,329 3 years March 2017 RSU 1,000,000 22,240 3 years May 2015 RSU 675,000 16,511 3 years As of September 30, 2018, there were 9.3 million shares available for future grants under the 2017 Manager Equity Plan and the 2017 Equity Plan. Schedule of Non-Vested Shares and Share Equivalents 2017 Weighted Average 2017 Manager Grant Date Fair Equity Plan Equity Plan Total Value (per share) Balance as of January 1, 2018 885,138 806,251 1,691,389 $ 21.95 Granted 788,608 775,000 1,563,608 21.25 Vested (267,037) (435,415) (702,452) 21.78 Forfeited (8,886) — (8,886) 21.39 Balance as of September 30, 2018 1,397,823 1,145,836 2,543,659 21.57 Non-Controlling Interests in Consolidated Subsidiaries As discussed in Note 3, in connection with our Woodstar II Portfolio acquisitions, we issued 10.2 million Class A Units in SPT Dolphin. The Class A Units are redeemable for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. No Class A Units were redeemed through September 30, 2018. In consolidation, the issued Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our condensed consolidated balance sheets. To the extent SPT Dolphin has sufficient cash available, the Class A Units earn a preferred return indexed to the dividend rate of the Company’s common stock. Any distributions made pursuant to this waterfall are recognized within net income attributable to non-controlling interests in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2018, we recognized net income attributable to non-controlling interests of $4.8 million and $11.9 million, respectively, associated with these Class A Units. In March 2018, we acquired the non-controlling interest held by a third party in one of our consolidated REIS Equity Portfolio properties, which was carried at $0.3 million, for $3.3 million. The excess of the consideration paid to acquire the non-controlling interest over the carrying value of the non-controlling interest was recorded as a reduction of stockholders’ equity in March 2018. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2018 | |
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 Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Basic Earnings Income attributable to STWD common stockholders $ 84,536 $ 88,428 $ 293,698 $ 308,166 Less: Income attributable to participating shares not already deducted as non-controlling interests (970) (761) (2,725) (2,489) Basic earnings $ 83,566 $ 87,667 $ 290,973 $ 305,677 Diluted Earnings Income attributable to STWD common stockholders $ 84,536 $ 88,428 $ 293,698 $ 308,166 Less: Income attributable to participating shares not already deducted as non-controlling interests (970) (761) (2,725) (2,489) Add: Interest expense on Convertible Notes (1) * N/A 21,102 N/A Add: Loss on extinguishment of Convertible Notes (1) * N/A 1,810 N/A Diluted earnings $ 83,566 $ 87,667 $ 313,885 $ 305,677 Number of Shares: Basic — Average shares outstanding 265,355 259,759 262,356 259,412 Effect of dilutive securities — Convertible Notes (1) * 2,313 25,675 2,284 Effect of dilutive securities — Contingently issuable shares 99 236 99 236 Effect of dilutive securities — Unvested non-participating shares 2 129 — 123 Diluted — Average shares outstanding 265,456 262,437 288,130 262,055 Earnings Per Share Attributable to STWD Common Stockholders: Basic $ 0.31 $ 0.34 $ 1.11 $ 1.18 Diluted $ 0.31 $ 0.33 $ 1.09 $ 1.17 (1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS for the prior year periods was determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the current year periods is determined using the “if-converted” method whereby interest expense or any loss on extinguishment of our Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator, if dilutive. Refer to Note 10 for further discussion. * As of September 30, 2018 and 2017, participating shares of 12.2 million and 1.6 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. Such participating shares at September 30, 2018 included 10.2 million potential shares of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 16. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 Balance at July 1, 2018 $ 7 $ 60,075 $ 8,052 $ 68,134 OCI before reclassifications — 715 (945) (230) Amounts reclassified from AOCI (6) 22 — 16 Net period OCI (6) 737 (945) (214) Balance at September 30, 2018 $ 1 $ 60,812 $ 7,107 $ 67,920 Three Months Ended September 30, 2017 Balance at July 1, 2017 $ 52 $ 51,682 $ 4,247 $ 55,981 OCI before reclassifications (3) 3,975 5,337 9,309 Amounts reclassified from AOCI (19) — — (19) Net period OCI (22) 3,975 5,337 9,290 Balance at September 30, 2017 $ 30 $ 55,657 $ 9,584 $ 65,271 Nine Months Ended September 30, 2018 Balance at January 1, 2018 $ 25 $ 57,889 $ 12,010 $ 69,924 OCI before reclassifications 8 2,977 (4,903) (1,918) Amounts reclassified from AOCI (32) (54) — (86) Net period OCI (24) 2,923 (4,903) (2,004) Balance at September 30, 2018 $ 1 $ 60,812 $ 7,107 $ 67,920 Nine Months Ended September 30, 2017 Balance at January 1, 2017 $ (26) $ 44,929 $ (8,765) $ 36,138 OCI before reclassifications 45 10,823 18,349 29,217 Amounts reclassified from AOCI 11 (95) — (84) Net period OCI 56 10,728 18,349 29,133 Balance at September 30, 2017 $ 30 $ 55,657 $ 9,584 $ 65,271 The reclassifications out of AOCI impacted the condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017 as follows (amounts in thousands): Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Nine Months Affected Line Item Ended September 30, Ended September 30, in the Statements Details about AOCI Components 2018 2017 2018 2017 of Operations Gain (loss) on cash flow hedges: Interest rate contracts $ 6 $ 19 $ 32 $ (11) Interest expense Unrealized gains (losses) on available-for-sale securities: Interest realized upon collection — — 46 95 Interest income from investment securities Net realized (loss) gain on sale of investment (22) — 8 — Gain on sale of investments and other assets, net Total (22) — 54 95 Total reclassifications for the period $ (16) $ 19 $ 86 $ 84 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2018 | |
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. For those assets acquired in connection with the Infrastructure Lending Segment acquisition and measured at fair value on a nonrecurring basis, we have determined the fair values as follows: Loans held-for-investment and investment securities held-to-maturity We measure the fair value of our loans held-for-investment and investment securities held-to-maturity acquired in a business combination by discounting their expected cash flows at a rate we estimate would be demanded by market participants. The expected cash flows used are generally the same as those used to calculate our level yield income in the financial statements. Since these inputs are unobservable, we have determined that the fair value of these assets would be classified in Level III of the fair value hierarchy. Loans held-for-sale We measure the fair value of our loans held-for-sale acquired in a business combination utilizing bids received from third parties to acquire these assets. As these bids represent observable market data, we have determined that the fair value of these assets would be classified in Level II of the fair value hierarchy. 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 September 30, 2018 and December 31, 2017 (amounts in thousands): September 30, 2018 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 913,505 $ — $ — $ 913,505 RMBS 227,867 — — 227,867 CMBS 48,589 — 2,774 45,815 Equity security 13,098 13,098 — — Domestic servicing rights 21,768 — — 21,768 Derivative assets 59,807 — 59,807 — VIE assets 48,034,610 — — 48,034,610 Total $ 49,319,244 $ 13,098 $ 62,581 $ 49,243,565 Financial Liabilities: Derivative liabilities $ 35,386 $ — $ 35,386 $ — VIE liabilities 46,945,674 — 45,152,469 1,793,205 Total $ 46,981,060 $ — $ 45,187,855 $ 1,793,205 December 31, 2017 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 745,743 $ — $ — $ 745,743 RMBS 247,021 — — 247,021 CMBS 24,191 — — 24,191 Equity security 13,523 13,523 — — Domestic servicing rights 30,759 — — 30,759 Derivative assets 33,898 — 33,898 — VIE assets 51,045,874 — — 51,045,874 Total $ 52,141,009 $ 13,523 $ 33,898 $ 52,093,588 Financial Liabilities: Derivative liabilities $ 36,200 $ — $ 36,200 $ — VIE liabilities 50,000,010 — 47,811,073 2,188,937 Total $ 50,036,210 $ — $ 47,847,273 $ 2,188,937 The changes in financial assets and liabilities classified as Level III are as follows for the three and nine months ended September 30, 2018 and 2017 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended September 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2018 balance $ 897,259 $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 4,036 100 63 (974) (1,261,314) 371,310 (886,779) Net accretion — 2,526 — — — — 2,526 Included in OCI — 737 — — — — 737 Purchases / Originations 597,318 — — — — — 597,318 Sales (565,990) (2,046) (3,163) — — — (571,199) Issuances — — — — — (18,901) (18,901) Cash repayments / receipts (19,118) (9,246) (6,815) — — (17,268) (52,447) Transfers into Level III — — — — (259,701) (231,925) Transfers out of Level III — — — — — 108,123 108,123 Consolidation of VIEs — — 3,304 — 1,623,863 (23,095) 1,604,072 Deconsolidation of VIEs — — — — (372,812) 48,442 (324,370) September 30, 2018 balance $ 913,505 $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2018 $ (2,501) $ 2,526 $ (884) $ (974) $ (1,261,314) $ 371,310 $ (891,837) Domestic Loans Servicing VIE Three Months Ended September 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2017 balance $ 610,116 $ 256,397 $ 13,848 $ 38,648 $ 53,902,715 $ (2,164,593) $ 52,657,131 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 19,485 — (673) (4,867) (3,533,620) 151,273 (3,368,402) Net accretion — 3,187 — — — — 3,187 Included in OCI — 3,975 — — — — 3,975 Purchases / Originations 524,409 — 11,798 — — — 536,207 Sales (517,350) — — — — — (517,350) Issuances — — — — — (1,469) (1,469) Cash repayments / receipts (28,036) (10,307) (1,666) — — (4,910) (44,919) Transfers into Level III — — — — — (233,367) (233,367) Transfers out of Level III — — — — — 67,272 67,272 Consolidation of VIEs — — — — 964,564 (75,585) 888,979 Deconsolidation of VIEs — — 534 — (135,678) 1,596 (133,548) September 30, 2017 balance $ 608,624 $ 253,252 $ 23,841 $ 33,781 $ 51,197,981 $ (2,259,783) $ 49,857,696 Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2017 $ (2,597) $ 3,187 $ (230) $ (4,867) $ (3,533,620) $ 151,273 $ (3,386,854) Domestic Loans Servicing VIE Nine Months Ended September 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2018 balance $ 745,743 $ $ 24,191 $ 30,759 $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 26,669 241 76 (8,991) (5,055,029) 906,360 (4,130,674) Net accretion — 7,967 — — — — 7,967 Included in OCI — 2,923 — — — — 2,923 Purchases / Originations 1,508,010 — 1,463 — — — 1,509,473 Sales (2,853) (3,163) — — — (1,053,771) Issuances — — — — — (26,849) (26,849) Cash repayments / receipts (123,652) (27,432) (7,832) — — (75,078) (233,994) Transfers into Level III — — 27,776 — — (950,660) (922,884) Transfers out of Level III (195,510) — — — — 425,973 230,463 Consolidation of VIEs — — 3,304 — 3,438,933 (23,095) 3,419,142 Deconsolidation of VIEs — — — — (1,395,168) 139,081 (1,256,087) September 30, 2018 balance $ 913,505 $ $ 45,815 $ 21,768 $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2018 $ (2,023) $ 7,913 $ (1,252) $ (8,991) $ (5,055,029) $ 906,360 $ (4,145,260) Domestic Loans Servicing VIE Nine Months Ended September 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2017 balance $ 63,279 $ 253,915 $ 31,546 $ 55,082 $ 67,123,261 $ (2,585,369) $ 64,941,714 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — (4,359) (21,301) (15,773,529) 749,757 (15,003,948) OTTI — (109) — — — — (109) Net accretion — 10,375 — — — — 10,375 Included in OCI — 10,728 — — — — 10,728 Purchases / Originations 1,527,364 7,433 11,798 — — — 1,546,595 Sales (987,828) — (11,134) — — — (998,962) Issuances — — — — — (11,657) (11,657) Cash repayments / receipts (39,675) (29,090) (8,754) — — (40,946) (118,465) Transfers into Level III — — — — — (616,794) (616,794) Transfers out of Level III — — — — — 231,012 231,012 Consolidation of VIEs — — — — 2,092,516 (75,585) 2,016,931 Deconsolidation of VIEs — — 4,744 — (2,244,267) 89,799 (2,149,724) September 30, 2017 balance $ 608,624 $ 253,252 $ 23,841 $ 33,781 $ 51,197,981 $ (2,259,783) $ 49,857,696 Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2017 $ (2,621) $ 10,159 $ 56 $ (21,301) $ (15,773,529) $ 749,757 $ (15,037,479) 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): September 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings $ 8,988,287 $ 9,043,997 $ 6,636,898 $ 6,729,302 HTM securities 473,896 474,395 433,468 428,338 Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ 8,660,835 $ 8,582,213 $ 5,847,241 $ 5,810,998 Unsecured senior notes 2,024,570 2,020,957 2,125,235 2,191,285 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) September 30, 2018 Technique Input September 30, 2018 December 31, 2017 Loans held-for-sale, fair value option $ 913,505 Discounted cash flow Yield (b) 4.7% - 6.0% 4.3% - 6.0% Duration (c) 2.2 - 11.5 years 1.8 - 12.1 years RMBS 227,867 Discounted cash flow Constant prepayment rate (a) 3.1% - 21.8% 2.5% - 21.4% Constant default rate (b) 1.0% - 5.5% 0.9% - 5.8% Loss severity (b) 0% - 79% (e) 14% - 75% (e) Delinquency rate (c) 4% - 32% 4% - 33% Servicer advances (a) 23% - 82% 20% - 83% Annual coupon deterioration (b) 0% - 1.3% 0% - 0.8% Putback amount per projected total collateral loss (d) 0% - 7% 0% - 7% CMBS 45,815 Discounted cash flow Yield (b) 0% - 207.5% 0% - 168.5% Duration (c) 0 - 9.7 years 0 - 9.7 years Domestic servicing rights 21,768 Discounted cash flow Debt yield (a) 7.75% 7.75% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets 48,034,610 Discounted cash flow Yield (b) 0% - 951.3% 0% - 826.6% Duration (c) 0 - 14.0 years 0 - 14.0 years VIE liabilities (1,793,205) Discounted cash flow Yield (b) 0% - 951.3% 0% - 826.6% Duration (c) 0 - 14.0 years 0 - 14.0 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 (higher or lower) 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) 58% and 81% of the portfolio falls within a range of 45%-80% as of September 30, 2018 and December 31, 2017, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
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. As of September 30, 2018 and December 31, 2017, approximately $2.4 billion and $673.1 million, respectively, of assets, including $29.3 million and $24.1 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 nine months ended September 30, 2018 and 2017 (dollars in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Federal statutory tax rate $ 20,509 21.0 % $ 35,915 35.0 % $ 68,406 21.0 % $ 118,010 35.0 % REIT and other non-taxable income (13,628) (13.9) % (26,242) (25.5) % (57,128) (17.6) % (99,668) (29.6) % State income taxes 1,803 1.8 % 200 0.2 % 2,954 0.9 % 81 — % Federal benefit of state tax deduction (378) (0.4) % (70) (0.1) % (620) (0.2) % (28) — % Other (25) — % 13 — % 868 0.3 % (110) — % Effective tax rate $ 8,281 8.5 % $ 9,816 9.6 % $ 14,480 4.4 % $ 18,285 5.4 % |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 21. Commitments and Contingencie As of September 30, 2018, our Commercial and Residential Lending Segment had future commercial loan funding commitments totaling $1.8 billion, of which we expect to fund $1.6 billion. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Additionally, as of September 30, 2018, our Commercial and Residential Lending Segment had outstanding residential mortgage loan purchase commitments of $25.0 million under an agreement to purchase up to $600.0 million of residential mortgage loans that meet our investment criteria from a third party residential mortgage originator. As of September 30, 2018, our Infrastructure Lending Segment had future infrastructure loan funding commitments totaling $454.4 million, including $254.9 million under revolvers and LCs, and $199.5 million under delayed draw term loans. As of September 30, 2018, $34.5 million of revolvers and LCs were outstanding. In connection with the Infrastructure Lending Segment acquisition, we assumed guarantees of certain borrowers’ performance under existing interest rate swaps. As of September 30, 2018, we had 13 outstanding guarantees on interest rate swaps maturing between March 2019 and June 2045. Refer to Note 12 for further discussion. 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. 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 | 9 Months Ended |
Sep. 30, 2018 | |
Segment Data | |
Segment Data | 22. Segment Dat 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. Effective September 30, 2018, we refer to our former Lending Segment as the Commercial and Residential Lending Segment. We also established a new business segment, the Infrastructure Lending Segment, which we acquired on September 19, 2018. Refer to Note 3 for further discussion of the Infrastructure Lending Segment acquisition. The table below presents our results of operations for the three months ended September 30, 2018 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 147,913 $ 3,053 $ — $ 3,535 $ — $ 154,501 $ — $ 154,501 Interest income from investment securities 10,320 107 — 34,477 — 44,904 (33,396) 11,508 Servicing fees 98 — — 34,100 — 34,198 (6,374) 27,824 Rental income — — 76,067 15,065 — 91,132 — 91,132 Other revenues 265 44 169 229 89 796 (42) 754 Total revenues 158,596 3,204 76,236 87,406 89 325,531 (39,812) 285,719 Costs and expenses: Management fees 453 — — 18 25,937 26,408 111 26,519 Interest expense 43,322 2,258 19,483 7,396 30,475 102,934 (276) 102,658 General and administrative 7,016 537 1,680 19,131 2,753 31,117 86 31,203 Acquisition and investment pursuit costs 341 6,725 — (539) — 6,527 — 6,527 Costs of rental operations — — 23,052 7,139 — 30,191 — 30,191 Depreciation and amortization 17 — 28,448 5,828 — 34,293 — 34,293 Loan loss allowance, net 929 — — — — 929 — 929 Other expense 76 — — — — 76 — 76 Total costs and expenses 52,154 9,520 72,663 38,973 59,165 232,475 (79) 232,396 Income (loss) before other income (loss), income taxes and non-controlling interests 106,442 (6,316) 3,573 48,433 (59,076) 93,056 (39,733) 53,323 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 33,289 33,289 Change in fair value of servicing rights — — — (1,994) — (1,994) 1,020 (974) Change in fair value of investment securities, net 238 — — (4,966) — (4,728) 5,029 301 Change in fair value of mortgage loans held-for-sale, net 1,343 — — 2,597 — 3,940 — 3,940 Earnings (loss) from unconsolidated entities 514 — 1,988 (134) — 2,368 257 2,625 Gain on sale of investments and other assets, net 47 — — 1,415 — 1,462 — 1,462 Gain (loss) on derivative financial instruments, net 7,278 455 5,895 3,076 (4,969) 11,735 — 11,735 Foreign currency loss, net (3,546) (531) (1) — — (4,078) — (4,078) Loss on extinguishment of debt (730) — — — (1,810) (2,540) — (2,540) Other income (loss), net (1) — 2 (1,422) — (1,421) — (1,421) Total other income (loss) 5,143 (76) 7,884 (1,428) (6,779) 4,744 39,595 44,339 Income (loss) before income taxes 111,585 (6,392) 11,457 47,005 (65,855) 97,800 (138) 97,662 Income tax provision (314) — (125) (7,842) — (8,281) — (8,281) Net income (loss) 111,271 (6,392) 11,332 39,163 (65,855) 89,519 (138) 89,381 Net (income) loss attributable to non-controlling interests (365) — (4,769) 151 — (4,983) 138 (4,845) Net income (loss) attributable to Starwood Property Trust, Inc . $ 110,906 $ (6,392) $ 6,563 $ 39,314 $ (65,855) $ 84,536 $ — $ 84,536 The table below presents our results of operations for the three months ended September 30, 2017 by business segment (amounts in thousands): Commercial and Residential Investing Lending Property and Servicing Securitization Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 134,149 $ — $ 4,450 $ — $ 138,599 $ — $ 138,599 Interest income from investment securities 11,540 — 31,740 — 43,280 (30,829) 12,451 Servicing fees 142 — 23,093 — 23,235 (8,393) 14,842 Rental income — 47,663 12,490 — 60,153 — 60,153 Other revenues 181 164 441 — 786 (64) 722 Total revenues 146,012 47,827 72,214 — 266,053 (39,286) 226,767 Costs and expenses: Management fees 482 — 18 30,370 30,870 110 30,980 Interest expense 27,929 11,360 5,710 31,709 76,708 (277) 76,431 General and administrative 5,302 1,090 24,167 2,251 32,810 82 32,892 Acquisition and investment pursuit costs 807 245 (28) — 1,024 — 1,024 Costs of rental operations — 18,660 5,139 — 23,799 — 23,799 Depreciation and amortization 17 17,852 5,002 — 22,871 — 22,871 Loan loss allowance, net (171) — — — (171) — (171) Other expense 72 97 207 — 376 — 376 Total costs and expenses 34,438 49,304 40,215 64,330 188,287 (85) 188,202 Income (loss) before other income (loss), income taxes and non-controlling interests 111,574 (1,477) 31,999 (64,330) 77,766 (39,201) 38,565 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 56,177 56,177 Change in fair value of servicing rights — — (5,652) — (5,652) 785 (4,867) Change in fair value of investment securities, net 276 — 13,962 — 14,238 (14,635) (397) Change in fair value of mortgage loans held-for-sale, net (397) — 19,882 — 19,485 — 19,485 Earnings (loss) from unconsolidated entities 848 (33,731) 30,225 — (2,658) (2,031) (4,689) Gain on sale of investments and other assets, net — — 11,877 — 11,877 — 11,877 Loss on derivative financial instruments, net (10,813) (11,276) (2,135) — (24,224) — (24,224) Foreign currency gain (loss), net 10,657 (1) 4 — 10,660 — 10,660 Other income, net — — 28 — 28 — 28 Total other income (loss) 571 (45,008) 68,191 — 23,754 40,296 64,050 Income (loss) before income taxes 112,145 (46,485) 100,190 (64,330) 101,520 1,095 102,615 Income tax benefit (provision ) 11 — (9,827) — (9,816) — (9,816) Net income (loss) 112,156 (46,485) 90,363 (64,330) 91,704 1,095 92,799 Net income attributable to non-controlling interests (357) — (2,919) — (3,276) (1,095) (4,371) Net income (loss) attributable to Starwood Property Trust, Inc . $ 111,799 $ (46,485) $ 87,444 $ (64,330) $ 88,428 $ — $ 88,428 The table below presents our results of operations for the nine months ended September 30, 2018 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 431,153 $ 3,053 $ — $ 9,619 $ — $ 443,825 $ — $ 443,825 Interest income from investment securities 33,689 107 — 99,348 — 133,144 (95,577) 37,567 Servicing fees 313 — — 92,221 — 92,534 (21,328) 71,206 Rental income — — 217,178 43,955 — 261,133 — 261,133 Other revenues 683 44 351 973 227 2,278 (147) 2,131 Total revenues 465,838 3,204 217,529 246,116 227 932,914 (117,052) 815,862 Costs and expenses: Management fees 1,396 — — 54 82,895 84,345 310 84,655 Interest expense 110,169 2,258 55,397 18,298 96,132 282,254 (821) 281,433 General and administrative 19,962 537 5,510 64,006 8,602 98,617 256 98,873 Acquisition and investment pursuit costs 2,253 6,725 (46) (467) — 8,465 — 8,465 Costs of rental operations — — 72,531 20,250 — 92,781 — 92,781 Depreciation and amortization 50 — 86,655 16,482 — 103,187 — 103,187 Loan loss allowance, net 27,726 — — — — 27,726 — 27,726 Other expense 230 — — 447 — 677 — 677 Total costs and expenses 161,786 9,520 220,047 119,070 187,629 698,052 (255) 697,797 Income (loss) before other income (loss), income taxes and non-controlling interests 304,052 (6,316) (2,518) 127,046 (187,402) 234,862 (116,797) 118,065 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 129,888 129,888 Change in fair value of servicing rights — — — (14,417) — (14,417) 5,426 (8,991) Change in fair value of investment securities, net 16 — — 24,123 — 24,139 (16,285) 7,854 Change in fair value of mortgage loans held-for-sale, net (165) — — 26,738 — 26,573 — 26,573 Earnings from unconsolidated entities 3,761 — 1,406 2,916 — 8,083 (1,450) 6,633 Gain on sale of investments and other assets, net 461 — 6,883 18,215 — 25,559 — 25,559 Gain (loss) on derivative financial instruments, net 15,927 455 27,734 7,720 (24,338) 27,498 — 27,498 Foreign currency loss, net (3,260) (531) — (2) — (3,793) — (3,793) Loss on extinguishment of debt (730) — — (186) (1,810) (2,726) — (2,726) Other income (loss), net 42 — 508 (1,365) — (815) — (815) Total other income (loss) 16,052 (76) 36,531 63,742 (26,148) 90,101 117,579 207,680 Income (loss) before income taxes 320,104 (6,392) 34,013 190,788 (213,550) 324,963 782 325,745 Income tax provision (2,981) — (1,997) (9,502) — (14,480) — (14,480) Net income (loss) 317,123 (6,392) 32,016 181,286 (213,550) 310,483 782 311,265 Net income attributable to non-controlling interests (1,087) — (11,906) (3,792) — (16,785) (782) (17,567) Net income (loss) attributable to Starwood Property Trust, Inc . $ 316,036 $ (6,392) $ 20,110 $ 177,494 $ (213,550) $ 293,698 $ — $ 293,698 The table below presents our results of operations for the nine months ended September 30, 2017 by business segment (amounts in thousands): Commercial and Residential Investing Lending Property and Servicing Securitization Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 360,188 $ — $ 10,906 $ — $ 371,094 $ — $ 371,094 Interest income from investment securities 35,870 — 104,768 — 140,638 (100,593) 40,045 Servicing fees 568 — 86,837 — 87,405 (39,833) 47,572 Rental income — 138,795 37,366 — 176,161 — 176,161 Other revenues 553 430 1,450 — 2,433 (249) 2,184 Total revenues 397,179 139,225 241,327 — 777,731 (140,675) 637,056 Costs and expenses: Management fees 1,405 — 54 78,328 79,787 210 79,997 Interest expense 72,372 32,466 14,924 94,667 214,429 (821) 213,608 General and administrative 14,872 3,471 69,536 7,719 95,598 243 95,841 Acquisition and investment pursuit costs 1,707 516 9 — 2,232 — 2,232 Costs of rental operations — 51,843 15,858 — 67,701 — 67,701 Depreciation and amortization 50 52,288 14,793 — 67,131 — 67,131 Loan loss allowance, net (3,170) — — — (3,170) — (3,170) Other expense 72 63 1,141 — 1,276 — 1,276 Total costs and expenses 87,308 140,647 116,315 180,714 524,984 (368) 524,616 Income (loss) before other income (loss), income taxes and non-controlling interests 309,871 (1,422) 125,012 (180,714) 252,747 (140,307) 112,440 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 203,108 203,108 Change in fair value of servicing rights — — (28,956) — (28,956) 7,655 (21,301) Change in fair value of investment securities, net 299 — 45,263 — 45,562 (49,623) (4,061) Change in fair value of mortgage loans held-for-sale, net (549) — 46,033 — 45,484 — 45,484 Earnings (loss) from unconsolidated entities 2,548 (28,782) 67,134 — 40,900 (13,137) 27,763 (Loss) gain on sale of investments and other assets, net (59) 77 16,986 — 17,004 — 17,004 Loss on derivative financial instruments, net (30,274) (32,268) (3,617) — (66,159) — (66,159) Foreign currency gain, net 28,402 16 16 — 28,434 — 28,434 OTTI (109) — — — (109) — (109) Loss on extinguishment of debt — — — (5,916) (5,916) — (5,916) Other income, net — — 1,097 — 1,097 (613) 484 Total other income (loss) 258 (60,957) 143,956 (5,916) 77,341 147,390 224,731 Income (loss) before income taxes 310,129 (62,379) 268,968 (186,630) 330,088 7,083 337,171 Income tax provision (331) — (17,954) — (18,285) — (18,285) Net income (loss) 309,798 (62,379) 251,014 (186,630) 311,803 7,083 318,886 Net income attributable to non-controlling interests (1,064) — (2,573) — (3,637) (7,083) (10,720) Net income (loss) attributable to Starwood Property Trust, Inc . $ 308,734 $ (62,379) $ 248,441 $ (186,630) $ 308,166 $ — $ 308,166 The table below presents our condensed consolidated balance sheet as of September 30, 2018 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 15,217 $ 8 $ 23,496 $ 44,771 $ 180,946 $ 264,438 $ 1,319 $ 265,757 Restricted cash 34,325 28,222 18,239 14,508 28,970 124,264 — 124,264 Loans held-for-investment, net 7,004,938 — 3,460 — 8,500,674 — 8,500,674 Loans held-for-sale 719,781 320,270 — 286,786 — 1,326,837 — 1,326,837 Loans transferred as secured borrowings 74,281 — — — — 74,281 — 74,281 Investment securities 718,262 65,060 — — 1,810,876 (1,047,426) 763,450 Properties, net — — 268,517 — 2,888,737 — 2,888,737 Properties held-for-sale — — 31,928 20,374 — 52,302 — 52,302 Intangible assets — — 96,348 80,420 — 176,768 (22,820) 153,948 Investment in unconsolidated entities 34,334 — 112,110 43,804 — 190,248 (21,460) 168,788 Goodwill — 115,988 — 140,437 — 256,425 — 256,425 Derivative assets 15,232 481 41,461 2,633 — 59,807 — 59,807 Accrued interest receivable 42,080 6,356 269 1,090 3,243 53,038 (127) 52,911 Other assets 38,604 8,398 99,412 49,882 2,399 198,695 (7) 198,688 VIE assets, at fair value — — — — — — 48,034,610 48,034,610 Total Assets $ 8,697,054 $ $ $ $ 215,558 $ 15,977,390 $ 46,944,089 $ 62,921,479 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,681 $ 10,889 $ 71,253 $ 80,353 $ 28,600 $ 214,776 $ 126 $ 214,902 Related-party payable — — — 74 25,212 25,286 — 25,286 Dividends payable — — — — 132,549 132,549 — 132,549 Derivative liabilities 3,015 381 2,276 251 29,463 35,386 — 35,386 Secured financing agreements, net 4,117,051 759,012 297,655 8,610,387 (23,700) 8,586,687 Unsecured senior notes, net — — — — 2,024,570 2,024,570 — 2,024,570 Secured borrowings on transferred loans, net 74,148 — — — — 74,148 — 74,148 VIE liabilities, at fair value — — — — — — 46,945,674 46,945,674 Total Liabilities 4,217,895 839,690 2,538,049 11,117,102 46,922,100 58,039,202 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — 2,793 2,793 — 2,793 Additional paid-in capital 1,481,943 525,108 809,734 270,045 1,876,231 4,963,061 — 4,963,061 Treasury stock — — — — (104,194) (104,194) — (104,194) Accumulated other comprehensive income (loss) 60,811 — 7,171 (62) — 67,920 — 67,920 Retained earnings (accumulated deficit) 2,926,015 (6,392) 5,775 863,580 (4,097,321) (308,343) — (308,343) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,468,769 518,716 822,680 (2,322,491) 4,621,237 — 4,621,237 Non-controlling interests in consolidated subsidiaries 10,390 — 217,678 10,983 — 239,051 21,989 261,040 Total Equity 4,479,159 518,716 (2,322,491) 4,860,288 21,989 4,882,277 Total Liabilities and Equity $ 8,697,054 $ $ $ $ 215,558 $ 15,977,390 $ 46,944,089 $ 62,921,479 The table below presents our condensed consolidated balance sheet as of December 31, 2017 by business segment (amounts in thousands): Commercial and Residential Investing Lending Property and Servicing Securitization Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 14,580 $ 10,388 $ 39,446 $ 299,308 $ 363,722 $ 5,726 $ 369,448 Restricted cash 21,555 12,491 10,289 4,490 48,825 — 48,825 Loans held-for-investment, net 6,558,699 — 3,796 — 6,562,495 — 6,562,495 Loans held-for-sale 613,287 — 132,456 — 745,743 — 745,743 Loans transferred as secured borrowings 74,403 — — — 74,403 — 74,403 Investment securities 694,012 — 1,024,143 — 1,718,155 (999,952) 718,203 Properties, net — 2,364,806 282,675 — 2,647,481 — 2,647,481 Intangible assets — 116,081 95,257 — 211,338 (28,246) 183,092 Investment in unconsolidated entities 45,028 110,704 50,759 — 206,491 (20,988) 185,503 Goodwill — — 140,437 — 140,437 — 140,437 Derivative assets 6,487 26,775 636 — 33,898 — 33,898 Accrued interest receivable 46,650 68 243 786 47,747 — 47,747 Other assets 5,648 71,929 59,676 3,755 141,008 (2,868) 138,140 VIE assets, at fair value — — — — — 51,045,874 51,045,874 Total Assets $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,054 $ 62,890 $ 74,426 $ 23,536 $ 183,906 $ 1,211 $ 185,117 Related-party payable 20 — 31 42,318 42,369 — 42,369 Dividends payable — — — 125,916 125,916 — 125,916 Derivative liabilities 20,386 13,063 85 2,666 36,200 — 36,200 Secured financing agreements, net 3,466,487 1,621,885 411,526 296,858 5,796,756 (23,700) 5,773,056 Unsecured senior notes, net — — — 2,125,235 2,125,235 — 2,125,235 Secured borrowings on transferred loans 74,185 — — — 74,185 — 74,185 VIE liabilities, at fair value — — — — — 50,000,010 50,000,010 Total Liabilities 3,584,132 1,697,838 486,068 2,616,529 8,384,567 49,977,521 58,362,088 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — 2,660 2,660 — 2,660 Additional paid-in capital 1,818,559 957,329 659,062 1,280,296 4,715,246 — 4,715,246 Treasury stock — — — (92,104) (92,104) — (92,104) Accumulated other comprehensive income (loss) 57,914 12,076 (66) — 69,924 — 69,924 Retained earnings (accumulated deficit) 2,609,050 (14,335) 687,015 (3,499,042) (217,312) — (217,312) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,485,523 955,070 1,346,011 (2,308,190) 4,478,414 — 4,478,414 Non-controlling interests in consolidated subsidiaries 10,694 60,334 7,734 — 78,762 22,025 100,787 Total Equity 4,496,217 1,015,404 1,353,745 (2,308,190) 4,557,176 22,025 4,579,201 Total Liabilities and Equity $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 23. Subsequent Events Our significant events subsequent to September 30, 2018 were as follows: Infrastructure Lending Segment On October 3, 2018, we paid down $62.5 million of the outstanding balance on the Infrastructure Lending Facility. Refer to Note 9 for further discussion. On October 15, 2018, we acquired two additional senior secured project finance loans from GE Capital in connection with the Infrastructure Lending Segment acquisition for a gross purchase price of $147.1 million and utilized $120.4 million of available financing from the Infrastructure Lending Facility to fund the acquisition. 2019 Convertible Notes Subsequent to September 30, 2018, an additional $27.9 million of 2019 Note redemptions were settled through the issuance of 1.2 million shares and cash payments totaling $4.7 million. Refer to Note 10 for further discussion. Dividend Declaration On November 9, 2018, our board of directors declared a dividend of $0.48 per share for the fourth quarter of 2018, which is payable on January 15, 2019 to common stockholders of record as of December 31, 2018. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Balance Sheet Presentation of Securitization Variable Interest Entities | Balance Sheet Presentation of Securitization Variable Interest Entities We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. 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 we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, 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 our business segments 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, 2017 (our “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2018 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, (iii) became significant since December 31, 2017 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). |
Variable Interest Entities | Variable Interest Entities In addition to the securitization VIEs, certain other entities in which we hold interests are 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. 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: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) 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. 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. 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 unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these 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: (i) 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 (ii) 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 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 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 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 trust. REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 2% of our consolidated securitization VIE assets, with the remaining 98% 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 or acquired for future securitization, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities which, effective January 1, 2018, are now required to be carried at fair value through earnings. 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 were made due to the expected short-term holding period of these instruments. |
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 VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 19 for further discussion regarding our fair value measurements. |
Business Combinations | Business Combinations Under ASC 805, Business Combinations , the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full goodwill” approach. During the measurement period, a period which shall not exceed one year, we prospectively adjust the provisional amounts recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized. |
Loans Held-for-Investment | Loans Held-for-Investment 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. In connection with this evaluation, 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. Loan Impairment 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. 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 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, 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. There may be circumstances where we modify a loan by granting the borrower a concession that we might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDRs”) unless the modification solely results in a delay in payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes. |
Loans Held-For-Sale | Loans Held‑For‑Sale Our loans that we intend to sell or liquidate in the short‑term are classified as held‑for‑sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. |
Properties Held-For-Sale | Properties Held-For-Sale Properties and any associated intangible assets are presented within properties held-for-sale on our condensed consolidated balance sheet when the sale of the property is considered probable, at which time we cease depreciation and amortization of the property and the associated intangibles. Held-for-sale properties are reported at the lower of their carrying value or fair value less costs to sell. |
Cost Method Equity Investments | Cost Method Equity Investments On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities , became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer. Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment. Our equity investments within the scope of this ASU are limited to our cost method equity investments discussed in Note 7, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 5 for which we had previously elected the fair value option. Our cost method equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer. Refer to Note 7 for further discussion. |
Revenue Recognition | Revenue Recognition On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company. Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections. We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms. For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Accretable yield, if any, will be recognized as interest income on a level-yield basis over the life of the loan. |
Share-Based Payments | Share-Based Payments Effective July 1, 2018, we early adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting , which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. Prior to our adoption of ASU 2018-07, nonemployee share awards were recognized as an expense on a straight-line basis over the vesting period of the award with the fair value of the award remeasured at each vesting date. After our adoption of ASU 2018-07, nonemployee share awards continue to be recorded as expense on a straight-line basis over their vesting period, however, the fair value of the award will only be determined on the grant date and not remeasured at subsequent vesting dates, consistent with the accounting for employee share awards. For non-employee awards granted prior to our July 1, 2018 adoption date, the awards will be remeasured at fair value as of our July 1, 2018 adoption date with no subsequent remeasurement. |
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, (iii) the conversion options associated with our outstanding convertible senior notes (see Notes 10 and 17), and (iv) non-controlling interests that are redeemable with our common stock (see Note 16). 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. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 16). 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 nine months ended September 30, 2018 and 2017, 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. |
Recent Accounting Developments | Recent Accounting Developments 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 by this ASU. This 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. On July 30, 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements , which provides an optional transition method of applying the new leases standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors with a practical expedient to not separate non-lease revenue components from the associated lease component if certain conditions are met. Our assessment of the effect of these ASUs on the Company remains ongoing; however, we currently do not expect the application of these ASUs to have a material impact as the Company primarily acts as a lessor. 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 current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted though no earlier than the first interim or annual period beginning after December 15, 2018. Though we have not completed our assessment of this ASU, we expect the ASU to result in our recognition of higher levels of allowances for loan losses. Our assessment of the estimated amount of such increases remains in process. On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , which simplifies the method applied for measuring impairment in cases where goodwill is impaired. This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On August 28, 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities , which amends and simplifies existing guidance regarding the designation and measurement of designated hedging relationships. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework , which adds new disclosure requirements and modifies or eliminates existing disclosure requirements of ASC 820. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company, as it only affects fair value disclosures. On October 31, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810) – Targeted Improvements to Related Party Guidance for Variable Interest Entities , which requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We are in the process of assessing the impact this ASU will have on the Company. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) - Infrastructure Lending Segment | 9 Months Ended |
Sep. 30, 2018 | |
Summary of assets acquired and liabilities assumed | The following table summarizes the preliminary estimate of identified assets acquired and liabilities assumed at the acquisition date (amounts in thousands): Infrastructure Assets acquired: Lending Segment Loans held-for-investment $ 1,506,544 Loans held-for-sale 319,879 Investment securities 65,060 Accrued interest receivable 12,566 Total identifiable assets acquired 1,904,049 Liabilities assumed: Accounts payable, accrued expenses and other liabilities 8,327 Derivative liabilities 282 Total liabilities assumed 8,609 Net assets acquired $ 1,895,440 |
Schedule of the determination of goodwill | Goodwill represents the excess of the purchase price over the fair value of the underlying assets acquired and liabilities assumed. This determination of goodwill is as follows (amounts in thousands): Infrastructure Lending Segment Purchase price $ 2,011,428 Preliminary estimate of the fair value of net assets acquired 1,895,440 Goodwill $ 115,988 |
Schedule of pro forma revenue and net income | The unaudited pro forma revenues and net income attributable to the Company for the three and nine months ended September 30, 2018 and 2017, assuming the Infrastructure Lending Segment was acquired on January 1, 2017, are as follows (amounts in thousands, except per share amounts): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenues $ 308,320 $ 248,549 $ 886,931 $ 698,952 Net income attributable to STWD 90,821 88,367 300,288 302,485 Net income per share - Basic 0.34 0.34 1.13 1.16 Net income per share - Diluted 0.34 0.33 1.11 1.14 |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) September 30, 2018 Value Amount Coupon (years)(1) First mortgages (2) $ 6,474,478 $ 6,496,376 6.7 % 2.1 First priority infrastructure loans 1,492,276 1,510,157 5.1 % 3.5 Subordinated mortgages (3) 188,402 188,266 11.5 % 1.3 Mezzanine loans (2) 352,300 351,866 10.8 % 1.8 Other 25,274 28,677 8.7 % 3.5 Total loans held-for-investment 8,532,730 8,575,342 Loans held-for-sale, fair value option, residential 626,719 607,616 6.3 % 5.3 Loans held-for-sale, commercial (carrying value of $286,786 under fair value option) 379,848 382,270 4.8 % 8.4 Loans held-for-sale, infrastructure 320,270 324,422 3.4 % 5.7 Loans transferred as secured borrowings 74,281 74,692 6.9 % 1.5 Total gross loans 9,933,848 9,964,342 Loan loss allowance (loans held-for-investment) (32,056) — Total net loans $ 9,901,792 $ 9,964,342 December 31, 2017 First mortgages (2) $ 5,818,804 $ 5,843,623 6.2 % 2.0 Subordinated mortgages (3) 177,115 177,386 10.8 % 1.9 Mezzanine loans (2) 545,299 545,355 11.0 % 1.1 Other 25,607 29,320 8.5 % 3.9 Total loans held-for-investment 6,566,825 6,595,684 Loans held-for-sale, fair value option, residential 613,287 594,105 6.2 % 5.4 Loans held-for-sale, fair value option, commercial 132,456 132,393 4.6 % 10.0 Loans transferred as secured borrowings 74,403 75,000 6.2 % 2.3 Total gross loans 7,386,971 7,397,182 Loan loss allowance (loans held-for-investment) (4,330) — Total net loans $ 7,382,641 $ 7,397,182 (1) Represents the remaining WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition. (2) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $1.0 billion and $851.1 million being classified as first mortgages as of September 30, 2018 and December 31, 2017, respectively. (3) 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. |
Schedule of internal rating categories | 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%. |
Schedule of risk ratings by class of loan | As of September 30, 2018, the risk ratings for loans subject to our rating system, which excludes loans held-for-sale, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans First Priority Transferred % of Risk Rating First Infrastructure Subordinated Mezzanine As Secured Total Category Mortgages Loans Mortgages Loans Other Borrowings Total Loans 1 $ 1,433 $ — $ — $ — $ 19,672 $ — $ 21,105 0.2 % 2 2,917,836 — 11,752 118,694 — 74,281 3,122,563 31.4 % 3 3,285,546 — 164,673 233,606 — — 3,683,825 37.1 % 4 78,028 — — — — — 78,028 0.8 % 5 20,667 — — — — — 20,667 0.2 % N/A 170,968 (1) 1,492,276 (2) 11,977 (1) — 5,602 (1) — 1,680,823 16.9 % $ 6,474,478 $ 1,492,276 $ 188,402 $ 352,300 $ 25,274 $ 74,281 8,607,011 Loans held-for-sale 1,326,837 13.4 % Total gross loans $ 9,933,848 100.0 % (1) Represents loans individually evaluated for impairment in accordance with ASC 310-10. (2) First priority infrastructure loans were not risk rated as of September 30, 2018 as the Company is in the process of developing a risk rating policy for these loans. As of December 31, 2017, the risk ratings for loans subject to our rating system, which excludes loans held-for-sale, 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 As Secured Total Category Mortgages Mortgages Loans Other Borrowings Total Loans 1 $ 2,003 $ — $ — $ 20,267 $ — $ 22,270 0.3 % 2 2,462,268 11,927 137,803 — — 2,611,998 35.4 % 3 3,183,592 165,188 407,496 5,340 74,403 3,836,019 51.9 % 4 120,479 — — — — 120,479 1.6 % 5 50,462 — — — — 50,462 0.7 % N/A — — — — — — — % $ 5,818,804 $ 177,115 $ 545,299 $ 25,607 $ 74,403 6,641,228 Loans held-for-sale 745,743 10.1 % Total gross loans $ 7,386,971 100.0 % |
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 Nine Months Ended September 30, 2018 2017 Allowance for loan losses at January 1 $ 4,330 $ 9,788 Provision for (reversal of) loan losses (2,127) (3,170) Provision for impaired loans 29,853 — Charge-offs — — Recoveries — — Allowance for loan losses at September 30 $ 32,056 $ 6,618 Recorded investment in loans related to the allowance for loan loss $ 287,242 $ 310,046 |
Schedule of activity in loan portfolio | The activity in our loan portfolio was as follows (amounts in thousands): For the Nine Months Ended September 30, 2018 2017 Balance at January 1 $ 7,382,641 $ 5,946,274 Acquisition of Infrastructure Lending Portfolio 1,826,423 — Acquisitions/originations/additional funding 5,006,725 3,722,624 Capitalized interest (1) 44,293 55,987 Basis of loans sold (2) (1,985,388) (1,024,964) Loan maturities/principal repayments (2,383,658) (1,742,494) Discount accretion/premium amortization 28,954 27,014 Changes in fair value 26,573 45,484 Unrealized foreign currency translation (loss) gain (17,095) 31,395 Change in loan loss allowance, net (27,726) 3,170 Transfer to/from other asset classifications 50 844 Balance at September 30 $ 9,901,792 $ 7,065,334 (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) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of investment securities | Investment securities were comprised of the following as of September 30, 2018 and December 31, 2017 (amounts in thousands): Carrying Value as of September 30, 2018 December 31, 2017 RMBS, available-for-sale $ 227,867 $ 247,021 RMBS, fair value option (1) 44,976 — CMBS, fair value option (1) 1,051,039 1,024,143 Held-to-maturity (“HTM”) securities 473,896 433,468 Equity security, fair value 13,098 13,523 Subtotal — Investment securities 1,810,876 1,718,155 VIE eliminations (1) (1,047,426) (999,952) Total investment securities $ 763,450 $ 718,203 (1) Certain fair value option CMBS and RMBS 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): RMBS, RMBS, fair CMBS, fair HTM Equity Securitization available-for-sale value option value option Securities Security VIEs (1) Total Three Months Ended September 30, 2018 Purchases $ — $ 45,095 $ 26,258 $ 289,100 $ — $ (68,579) $ 291,874 Acquisition of Infrastructure Lending Portfolio — — — 65,060 — — 65,060 Sales 2,046 — 22,065 — — (18,902) 5,209 Principal collections 9,246 119 22,031 20,577 — (17,903) 34,070 Three Months Ended September 30, 2017 Purchases $ — $ — $ 30,844 $ 50,000 $ — $ (19,046) $ 61,798 Sales — — 1,469 — — (1,469) — Principal collections 10,307 — 1,666 111,671 — — 123,644 RMBS, RMBS, fair CMBS, fair HTM Equity Securitization available-for-sale value option value option Securities Security VIEs (1) Total Nine Months Ended September 30, 2018 Purchases $ — $ 45,095 $ 118,166 $ 289,100 $ — $ (140,022) $ 312,339 Acquisition of Infrastructure Lending Portfolio — — — 65,060 — — 65,060 Sales 2,853 — 30,012 — — (26,849) 6,016 Principal collections 27,432 119 82,812 323,061 — (77,667) 355,757 Nine Months Ended September 30, 2017 Purchases $ 7,433 $ — $ 92,569 $ 50,000 $ — $ (80,771) $ 69,231 Sales — — 22,791 — — (11,657) 11,134 Principal collections 29,090 — 8,754 172,059 — — 209,903 (1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. |
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 September 30, 2018 and December 31, 2017 (amounts 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 September 30, 2018 RMBS $ 176,952 $ (9,897) $ 167,055 $ — $ 60,812 $ — $ 60,812 $ December 31, 2017 RMBS $ $ (9,897) $ 189,132 $ (94) $ 58,011 $ (28) $ 57,889 $ Weighted Average Coupon (1) Weighted Average WAL September 30, 2018 RMBS 3.5 % CC+ 5.9 December 31, 2017 RMBS 2.8 % B 6.4 (1) Calculated using the September 30, 2018 and December 31, 2017 one-month LIBOR rate of 2.261% and 1.564%, respectively, for floating rate securities. (2) Represents the remaining 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 September 30, 2018 and December 31, 2017 (amounts in thousands): September 30, 2018 December 31, 2017 Principal balance $ 333,107 $ 366,711 Accretable yield (56,938) (55,712) Non-accretable difference (109,114) (121,867) Total discount (166,052) (177,579) Amortized cost $ 167,055 $ 189,132 |
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 nine months ended September 30, 2018 (amounts in thousands): Non-Accretable Three Months Ended September 30, 2018 Accretable Yield Difference Balance as of July 1, 2018 $ 50,877 $ 118,602 Accretion of discount (2,526) — Principal write-downs, net — (549) Sales (352) — Transfer to/from non-accretable difference 8,939 (8,939) Balance as of September 30, 2018 $ 56,938 $ 109,114 Nine Months Ended September 30, 2018 Balance as of January 1, 2018 $ 55,712 $ 121,867 Accretion of discount (7,967) — Principal write-downs, net — (3,030) Sales (530) — Transfer to/from non-accretable difference 9,723 (9,723) Balance as of September 30, 2018 $ 56,938 $ 109,114 |
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 September 30, 2018 and December 31, 2017, 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 September 30, 2018 RMBS $ — $ — $ — $ — As of December 31, 2017 RMBS $ 10,321 $ 643 $ (99) $ (23) |
Held-to-maturity | |
Summary of investments in HTM securities | The table below summarizes unrealized gains and losses of our investments in HTM securities as of September 30, 2018 and December 31, 2017 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value September 30, 2018 CMBS $ 408,836 $ 2,582 $ (2,083) $ 409,335 Infrastructure bonds 65,060 — — 65,060 Total $ 473,896 $ 2,582 $ (2,083) $ 474,395 December 31, 2017 CMBS $ $ 2,002 $ (7,779) $ 407,333 Preferred interests 20,358 647 — 21,005 Total $ 433,468 $ 2,649 $ (7,779) $ 428,338 |
Summary of maturities of preferred equity interests in limited liability companies that own commercial real estate | The table below summarizes the maturities of our HTM securities by type as of September 30, 2018 (amounts in thousands): Infrastructure CMBS bonds Total Less than one year $ 75,268 $ — $ 75,268 One to three years 305,311 16,330 321,641 Three to five years 28,257 — 28,257 Thereafter — 48,730 48,730 Total $ 408,836 $ 65,060 $ 473,896 |
Properties (Tables)
Properties (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Properties | |
Summary of properties | The table below summarizes our properties held-for-investment as of September 30, 2018 and December 31, 2017 (dollars in thousands): Depreciable Life September 30, 2018 December 31, 2017 Property Segment Land and land improvements 0 – 15 years $ 663,448 $ 585,915 Buildings and building improvements 5 – 45 years 2,059,383 1,838,266 Furniture & fixtures 3 – 7 years 44,458 31,028 Investing and Servicing Segment Land and land improvements 0 – 15 years 82,332 86,711 Buildings and building improvements 3 – 40 years 206,643 212,094 Furniture & fixtures 2 – 5 years 1,871 1,036 Properties, cost 3,058,135 2,755,050 Less: accumulated depreciation (169,398) (107,569) Properties, net $ 2,888,737 $ 2,647,481 |
Investment in Unconsolidated _2
Investment in Unconsolidated Entities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investment in Unconsolidated Entities | |
Summary of investments in unconsolidated entities | The table below summarizes our investment in unconsolidated entities as of September 30, 2018 and December 31, 2017 (dollars in thousands): Participation / Carrying value as of Ownership % (1) September 30, 2018 December 31, 2017 Equity method: Retail Fund 33% $ 112,110 $ 110,704 Investor entity which owns equity in an online real estate company 50% 9,363 9,312 Equity interests in commercial real estate 50% 6,507 (2) 23,192 Equity interest in and advances to a residential mortgage originator N/A 8,996 (3) 7,742 Various 25% - 50% 6,127 3,538 143,103 154,488 Cost method: Equity interest in a servicing and advisory business 6% 6,207 12,234 Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% 9,225 9,225 Various 0% - 3% 10,253 9,556 25,685 31,015 $ 168,788 $ 185,503 (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) In March 2018, our preferred equity investment in a portfolio of student housing properties was redeemed in full for cash proceeds of $16.7 million. (3) Includes a $2.0 million subordinated loan the Company funded in June 2018. Refer to Note 15 for further discussion. |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangibles | |
Summary of intangibles assets | The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of September 30, 2018 and December 31, 2017 (amounts in thousands): As of September 30, 2018 As of December 31, 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ 21,768 $ — $ 21,768 $ 30,759 $ — $ 30,759 In-place lease intangible assets 198,814 (94,761) 104,053 187,816 (65,351) 122,465 Favorable lease intangible assets 37,039 (8,912) 28,127 37,231 (7,363) 29,868 Total net intangible assets $ 257,621 $ (103,673) $ 153,948 $ 255,806 $ (72,714) $ 183,092 |
Summary of activity within intangible assets | The following table summarizes the activity within intangible assets for the nine months ended September 30, 2018 (amounts in thousands): Domestic In-place Lease Favorable Lease Servicing Intangible Intangible Rights Assets Assets Total Balance as of January 1, 2018 $ 30,759 $ 122,465 $ 29,868 $ 183,092 Acquisition of additional Woodstar II Portfolio properties — 10,792 — 10,792 Acquisition of additional REIS Equity Portfolio properties — 7,342 2,687 10,029 Amortization — (33,458) (3,138) (36,596) Sales — (1,041) (953) (1,994) Foreign exchange loss — (936) (254) (1,190) Impairment (1) — (361) — (361) Changes in fair value due to changes in inputs and assumptions (8,991) — — (8,991) Transfers to properties held-for-sale — (750) (83) (833) Balance as of September 30, 2018 $ 21,768 $ 104,053 $ 28,127 $ 153,948 (1) Impairment of intangible lease assets is recognized within other expense in our condensed consolidated statements of operations. |
Schedule of future amortization expense | The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands): 2018 (remainder of) $ 7,308 2019 23,323 2020 17,547 2021 15,099 2022 12,286 Thereafter 56,617 Total $ 132,180 |
Secured Financing Agreements (T
Secured Financing Agreements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Secured Financing Agreements | |
Summary of secured financing agreements | The following table is a summary of our secured financing agreements in place as of September 30, 2018 and December 31, 2017 (dollars in thousands): Carrying Value at Current Extended Pledged Asset Maximum September 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2018 2017 Lender 1 Repo 1 (b) (b) LIBOR + 1.60% to 5.75% $ 1,703,978 $ $ 1,303,966 $ 1,137,654 Lender 2 Repo 1 Apr 2020 Apr 2023 LIBOR + 1.50% to 2.35% 322,291 900,000 (c) 243,100 238,428 Lender 3 Repo 1 N/A N/A N/A — — — 75,291 Lender 4 Repo 2 May 2021 May 2023 LIBOR + 2.00% to 3.25% 964,155 401,592 215,372 Lender 6 Repo 1 Aug 2021 N/A LIBOR + 2.00% to 2.75% 654,464 600,000 507,545 494,353 Lender 6 Repo 2 Oct 2022 Oct 2023 GBP LIBOR + 2.75%, EURIBOR + 2.25% 515,755 431,056 403,685 332,815 Lender 7 Repo 1 Sep 2021 Sep 2023 LIBOR + 1.75% to 2.25% — 250,000 — — Lender 9 Repo 1 N/A N/A N/A — — — 65,762 Lender 10 Repo 1 May 2021 May 2023 LIBOR + 1.50% to 2.75% 200,425 164,840 160,480 77,800 Lender 11 Repo 1 Jun 2019 Jun 2020 LIBOR + 2.75% — 200,000 — — Lender 11 Repo 2 Sep 2019 Sep 2023 LIBOR + 2.00% to 2.75% 355,451 500,000 270,690 — Lender 12 Repo 1 Jun 2021 Jun 2024 LIBOR + 2.10% to 2.45% 57,322 250,000 43,500 — Lender 13 Repo 1 (d) (d) LIBOR + 1.50% 18,407 200,000 14,824 — Lender 7 Secured Financing Feb 2021 Feb 2023 LIBOR + 2.25% (e) 353,449 650,000 (f) 159,453 — Lender 8 Secured Financing Aug 2019 N/A LIBOR + 4.00% — — — 15,617 Conduit Repo 2 Nov 2018 Nov 2019 LIBOR + 2.25% 122,728 200,000 94,600 40,075 Conduit Repo 3 Feb 2020 Feb 2021 LIBOR + 2.10% 125,108 150,000 94,508 26,895 MBS Repo 1 (g) (g) N/A — — — 6,510 MBS Repo 2 Sep 2020 N/A LIBOR + 1.65% to 2.25% 100,526 69,777 69,777 222,672 MBS Repo 3 (h) (h) LIBOR + 1.32% to 1.85% 752,458 365,812 365,812 224,150 MBS Repo 4 (i) N/A LIBOR + 1.70% 163,558 110,000 25,000 77,318 MBS Repo 5 Jun 2028 Dec 2028 4.14% 25,585 150,000 24,721 — Investing and Servicing Segment Property Mortgages Dec 2018 to N/A Various 244,184 218,019 203,165 177,411 Ireland Mortgage May 2020 N/A EURIBOR + 1.69% 468,926 338,525 338,525 349,900 Woodstar I Mortgages Nov 2025 to N/A 3.72% to 3.97% 361,415 276,748 276,748 276,748 Woodstar I Government Financing Mar 2026 to Jun 2049 N/A 1.00% to 5.00% 302,061 131,746 131,746 133,418 Woodstar II Mortgages Jan 2028 to Apr 2028 N/A 3.81% to 3.85% 505,079 417,669 417,669 116,745 Woodstar II Government Financing Jun 2030 to Aug 2052 N/A 1.00% to 3.19% 161,987 27,018 27,018 — Medical Office Mortgages Dec 2021 Dec 2023 LIBOR + 2.50% 687,921 524,499 491,197 497,613 Master Lease Mortgages Oct 2027 N/A 4.36% to 4.38% 459,504 265,900 265,900 265,900 Infrastructure Lending Facility Sep 2021 Sep 2022 Various 1,877,606 2,127,267 1,536,477 — Term Loan A Dec 2020 Dec 2021 LIBOR + 2.25% (e) 918,342 300,000 300,000 300,000 Revolving Secured Financing Dec 2020 Dec 2021 LIBOR + 2.25% (e) — 100,000 — — FHLB Feb 2021 N/A Various 719,781 500,000 500,000 445,000 $ 13,142,466 $ 8,671,698 5,813,447 Unamortized net premium 495 2,559 Unamortized deferred financing costs (85,506) (42,950) $ 8,586,687 $ 5,773,056 (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans is September 2019 with an additional extension option to September 2021. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions and not to exceed September 2025. (c) The initial maximum facility size of $600.0 million may be increased to $900.0 million, subject to certain conditions. (d) Maturity date for borrowings collateralized by loans is May 2020 with an additional extension option to August 2021. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions. (e) Subject to borrower’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. (f) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (g) Facility carries a rolling 11-month term which may reset monthly with the lender’s consent. This facility carries no maximum facility size. (h) Facility carries a rolling 12-month term which may reset monthly with the lender’s consent. Current maturity is September 2019. This facility carries no maximum facility size. Amounts reflect the outstanding balance as of September 30, 2018. (i) The date that is 270 days after the buyer delivers notice to seller, subject to a maximum date of May 2020. |
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 2018 (remainder of) $ 197,287 $ 30,848 $ 228,135 2019 464,418 291,250 755,668 2020 594,641 649,594 1,244,235 2021 872,114 840,693 1,712,807 2022 804,939 981,724 1,786,663 Thereafter 1,090,401 1,853,789 2,944,190 Total $ 4,023,800 $ 4,647,898 $ 8,671,698 |
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 September 30, 2018 and December 31, 2017 (amounts in thousands): Class of Collateral September 30, 2018 December 31, 2017 Loans held-for-investment $ 3,349,382 $ 2,637,475 Loans held-for-sale 189,108 66,970 Investment securities 485,310 530,650 $ 4,023,800 $ 3,235,095 |
Unsecured Senior Notes (Tables)
Unsecured Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Unsecured Senior Notes | |
Schedule of unsecured convertible senior notes outstanding | The following table is a summary of our unsecured senior notes outstanding as of September 30, 2018 and December 31, 2017 (dollars in thousands): Remaining Coupon Effective Maturity Period of Carrying Value at Rate Rate (1) Date Amortization September 30, 2018 December 31, 2017 2018 Convertible Notes N/A N/A N/A N/A — 369,981 2019 Convertible Notes 4.00 % 5.74 % 1/15/2019 years 105,908 341,363 2021 Senior Notes (February) 3.63 % 3.89 % 2/1/2021 years 500,000 — 2021 Senior Notes (December) 5.00 % 5.32 % 12/15/2021 years 700,000 700,000 2023 Convertible Notes 4.38 % 4.86 % 4/1/2023 years 250,000 250,000 2025 Senior Notes 4.75 % 5.04 % 3/15/2025 years 500,000 500,000 Total principal amount 2,055,908 2,161,344 Unamortized discount—Convertible Notes (5,194) (11,186) Unamortized discount—Senior Notes (17,454) (16,654) Unamortized deferred financing costs (8,690) (8,269) Carrying amount of debt components $ 2,024,570 $ 2,125,235 Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes $ 3,755 $ 31,638 (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our convertible senior notes, the value of which reduced the initial liability and was recorded in additional paid‑in capital. |
Schedule of conversion attributes on Convertible Notes outstanding | The following table details the conversion attributes of our Convertible Notes outstanding as of September 30, 2018 (amounts in thousands, except rates): September 30, 2018 Conversion Spread Value - Shares (3) Conversion Conversion For the Three Months Ended September 30, For the Nine Months Ended September 30, Rate (1) Price (2) 2018 2017 2018 2017 2018 Notes N/A N/A — 742 — 733 2019 Notes 51.7349 $ 19.33 542 1,571 559 1,551 2023 Notes 38.5959 $ 25.91 — — — — 542 2,313 559 2,284 (1) 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). (2) As of September 30, 2018 and 2017, the market price of the Company’s common stock was $21.52 and $21.72 per share, respectively. (3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion. |
Loan Securitization_Sale Acti_2
Loan Securitization/Sale Activities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
LNR | |
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 nine months ended September 30, 2018 and 2017 (amounts in thousands): Repayment of repurchase Face Amount Proceeds agreements For the Three Months Ended September 30, 2018 $ 360,651 $ 372,300 $ 272,156 2017 498,022 517,351 376,687 For the Nine Months Ended September 30, 2018 $ 825,610 $ 854,065 $ 623,538 2017 938,879 987,828 709,666 |
Real Estate Investment Lending | |
Summary of loans sold and loans transferred as secured borrowings by the Lending segment net of expenses | In these instances, similar to the strategy of our Investing and Servicing Segment described above, we consolidate the underlying VIE into which the loans were sold. During the three months ended September 30, 2018, we consolidated the securitization VIE into which our residential loans were sold, along with a securitization VIE into which one of our commercial loans was sold. In each of these instances, we retained an interest in the VIE. The following table summarizes our loans sold and loans transferred as secured borrowings by the Commercial and Residential Lending Segment net of expenses (amounts in thousands): Loan Transfers Loan Transfers Accounted for as Sales Accounted for as Secured Commercial Residential Borrowings Face Amount Proceeds Face Amount Proceeds Face Amount Proceeds For the Three Months Ended September 30, 2018 $ 550,000 $ 547,776 $ 374,071 $ 389,044 $ — $ — 2017 — — — — 75,000 74,200 For the Nine Months Ended September 30, 2018 $ 746,400 $ 742,496 $ 374,071 $ 389,044 $ — $ — 2017 38,750 37,079 — — 75,000 74,200 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 derivatives as of September 30, 2018 (notional amounts in thousands): Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity Fx contracts – Sell Euros ("EUR") 56 292,826 EUR November 2018 – October 2022 Fx contracts – Sell Pounds Sterling ("GBP") 148 250,899 GBP October 2018 – October 2022 Fx contracts – Sell Canadian dollar ("CAD") 16 9,055 CAD January 2019 – October 2022 Fx contracts – Sell Australian dollar ("AUD") 4 8,122 AUD January 2019 – October 2019 Fx contracts – Buy EUR 1 2,166 EUR October 2018 Fx contracts – Buy GBP 3 7,589 GBP October 2018 – July 2019 Fx contracts – Buy CAD 1 1,103 CAD October 2018 Fx contracts – Buy AUD 1 1,064 AUD October 2018 Interest rate swaps – Paying fixed rates 45 1,238,520 USD April 2019 – October 2028 Interest rate swaps – Receiving fixed rates 2 970,000 USD January 2021 – March 2025 Interest rate caps 2 294,000 EUR May 2020 Interest rate caps 10 126,979 USD November 2018 – October 2021 Credit index instruments 9 74,000 USD November 2054 – November 2059 Forward loan purchase commitments 1 25,000 USD November 2018 Interest rate swap guarantees 11 730,356 USD March 2019 – June 2025 Interest rate swap guarantees 1 11,930 GBP December 2024 Interest rate swap guarantees 1 92,699 CAD June 2045 Total 312 |
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 September 30, 2018 and December 31, 2017 (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 September 30, December 31, September 30, December 31, 2018 2017 2018 2017 Derivatives designated as hedging instruments: Interest rate swaps $ 1 $ 25 $ — $ — Total derivatives designated as hedging instruments 1 25 — — Derivatives not designated as hedging instruments: Interest rate contracts 52,760 27,234 29,560 2,781 Interest rate swap guarantees — — 282 — Foreign exchange contracts 7,046 6,400 5,390 33,419 Credit index instruments — 239 154 — Total derivatives not designated as hedging instruments 59,806 33,873 35,386 36,200 Total derivatives $ 59,807 $ 33,898 $ 35,386 $ 36,200 (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 | 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 nine months ended September 30, 2018 and 2017 (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 September 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2018 $ — $ 6 $ — Interest expense 2017 $ (3) $ 19 $ — Interest expense For the Nine Months Ended September 30, 2018 $ 8 $ 32 $ — Interest expense 2017 $ 45 $ (11) $ — 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 September 30, Nine Months Ended September 30, as Hedging Instruments Recognized in Income 2018 2017 2018 2017 Interest rate contracts Gain (loss) on derivative financial instruments $ 4,444 $ (3,836) $ 10,553 $ (10,190) Foreign exchange contracts Gain (loss) on derivative financial instruments 8,073 (19,650) 17,748 (54,814) Credit index instruments Gain (loss) on derivative financial instruments (782) (738) (803) (1,155) $ 11,735 $ (24,224) $ 27,498 $ (66,159) |
Offsetting Assets and Liabili_2
Offsetting Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 Derivative assets $ 59,807 $ — $ 59,807 $ 4,387 $ — $ 55,420 Derivative liabilities $ 35,386 $ — $ 35,386 $ 4,387 $ 30,185 $ 814 Repurchase agreements 4,023,800 — 4,023,800 4,023,800 — — $ 4,059,186 $ — $ 4,059,186 $ 4,028,187 $ 30,185 $ 814 As of December 31, 2017 Derivative assets $ 33,898 $ — $ 33,898 $ 6,523 $ — $ 27,375 Derivative liabilities $ 36,200 $ — $ 36,200 $ 6,523 $ 15,333 $ 14,344 Repurchase agreements 3,235,095 — 3,235,095 3,235,095 — — $ 3,271,295 $ — $ 3,271,295 $ 3,241,618 $ 15,333 $ 14,344 |
Stockholders' Equity and Non-_2
Stockholders' Equity and Non-Controlling Interests (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity and Non-Controlling Interests | |
Schedule of dividends declared by board of directors | Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency 8/8/18 9/28/18 9/26/18 10/15/18 $ 0.48 Quarterly 5/4/18 6/29/18 6/27/18 7/13/18 $ 0.48 Quarterly 2/28/18 3/30/18 3/28/18 4/13/18 $ 0.48 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 and 2017 Manager Equity Plan during the nine months ended September 30, 2018 and 2017 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period April 2018 RSU 775,000 $ 16,329 3 years March 2017 RSU 1,000,000 22,240 3 years May 2015 RSU 675,000 16,511 3 years |
Schedule of Non-Vested Shares and Share Equivalents | 2017 Weighted Average 2017 Manager Grant Date Fair Equity Plan Equity Plan Total Value (per share) Balance as of January 1, 2018 885,138 806,251 1,691,389 $ 21.95 Granted 788,608 775,000 1,563,608 21.25 Vested (267,037) (435,415) (702,452) 21.78 Forfeited (8,886) — (8,886) 21.39 Balance as of September 30, 2018 1,397,823 1,145,836 2,543,659 21.57 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Basic Earnings Income attributable to STWD common stockholders $ 84,536 $ 88,428 $ 293,698 $ 308,166 Less: Income attributable to participating shares not already deducted as non-controlling interests (970) (761) (2,725) (2,489) Basic earnings $ 83,566 $ 87,667 $ 290,973 $ 305,677 Diluted Earnings Income attributable to STWD common stockholders $ 84,536 $ 88,428 $ 293,698 $ 308,166 Less: Income attributable to participating shares not already deducted as non-controlling interests (970) (761) (2,725) (2,489) Add: Interest expense on Convertible Notes (1) * N/A 21,102 N/A Add: Loss on extinguishment of Convertible Notes (1) * N/A 1,810 N/A Diluted earnings $ 83,566 $ 87,667 $ 313,885 $ 305,677 Number of Shares: Basic — Average shares outstanding 265,355 259,759 262,356 259,412 Effect of dilutive securities — Convertible Notes (1) * 2,313 25,675 2,284 Effect of dilutive securities — Contingently issuable shares 99 236 99 236 Effect of dilutive securities — Unvested non-participating shares 2 129 — 123 Diluted — Average shares outstanding 265,456 262,437 288,130 262,055 Earnings Per Share Attributable to STWD Common Stockholders: Basic $ 0.31 $ 0.34 $ 1.11 $ 1.18 Diluted $ 0.31 $ 0.33 $ 1.09 $ 1.17 (1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS for the prior year periods was determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the current year periods is determined using the “if-converted” method whereby interest expense or any loss on extinguishment of our Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator, if dilutive. Refer to Note 10 for further discussion. * |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 Balance at July 1, 2018 $ 7 $ 60,075 $ 8,052 $ 68,134 OCI before reclassifications — 715 (945) (230) Amounts reclassified from AOCI (6) 22 — 16 Net period OCI (6) 737 (945) (214) Balance at September 30, 2018 $ 1 $ 60,812 $ 7,107 $ 67,920 Three Months Ended September 30, 2017 Balance at July 1, 2017 $ 52 $ 51,682 $ 4,247 $ 55,981 OCI before reclassifications (3) 3,975 5,337 9,309 Amounts reclassified from AOCI (19) — — (19) Net period OCI (22) 3,975 5,337 9,290 Balance at September 30, 2017 $ 30 $ 55,657 $ 9,584 $ 65,271 Nine Months Ended September 30, 2018 Balance at January 1, 2018 $ 25 $ 57,889 $ 12,010 $ 69,924 OCI before reclassifications 8 2,977 (4,903) (1,918) Amounts reclassified from AOCI (32) (54) — (86) Net period OCI (24) 2,923 (4,903) (2,004) Balance at September 30, 2018 $ 1 $ 60,812 $ 7,107 $ 67,920 Nine Months Ended September 30, 2017 Balance at January 1, 2017 $ (26) $ 44,929 $ (8,765) $ 36,138 OCI before reclassifications 45 10,823 18,349 29,217 Amounts reclassified from AOCI 11 (95) — (84) Net period OCI 56 10,728 18,349 29,133 Balance at September 30, 2017 $ 30 $ 55,657 $ 9,584 $ 65,271 |
Schedule of reclassifications out of AOCI that impacted the condensed consolidated statements of operations | The reclassifications out of AOCI impacted the condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017 as follows (amounts in thousands): Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Nine Months Affected Line Item Ended September 30, Ended September 30, in the Statements Details about AOCI Components 2018 2017 2018 2017 of Operations Gain (loss) on cash flow hedges: Interest rate contracts $ 6 $ 19 $ 32 $ (11) Interest expense Unrealized gains (losses) on available-for-sale securities: Interest realized upon collection — — 46 95 Interest income from investment securities Net realized (loss) gain on sale of investment (22) — 8 — Gain on sale of investments and other assets, net Total (22) — 54 95 Total reclassifications for the period $ (16) $ 19 $ 86 $ 84 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 (amounts in thousands): September 30, 2018 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 913,505 $ — $ — $ 913,505 RMBS 227,867 — — 227,867 CMBS 48,589 — 2,774 45,815 Equity security 13,098 13,098 — — Domestic servicing rights 21,768 — — 21,768 Derivative assets 59,807 — 59,807 — VIE assets 48,034,610 — — 48,034,610 Total $ 49,319,244 $ 13,098 $ 62,581 $ 49,243,565 Financial Liabilities: Derivative liabilities $ 35,386 $ — $ 35,386 $ — VIE liabilities 46,945,674 — 45,152,469 1,793,205 Total $ 46,981,060 $ — $ 45,187,855 $ 1,793,205 December 31, 2017 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 745,743 $ — $ — $ 745,743 RMBS 247,021 — — 247,021 CMBS 24,191 — — 24,191 Equity security 13,523 13,523 — — Domestic servicing rights 30,759 — — 30,759 Derivative assets 33,898 — 33,898 — VIE assets 51,045,874 — — 51,045,874 Total $ 52,141,009 $ 13,523 $ 33,898 $ 52,093,588 Financial Liabilities: Derivative liabilities $ 36,200 $ — $ 36,200 $ — VIE liabilities 50,000,010 — 47,811,073 2,188,937 Total $ 50,036,210 $ — $ 47,847,273 $ 2,188,937 |
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 nine months ended September 30, 2018 and 2017 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended September 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2018 balance $ 897,259 $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 4,036 100 63 (974) (1,261,314) 371,310 (886,779) Net accretion — 2,526 — — — — 2,526 Included in OCI — 737 — — — — 737 Purchases / Originations 597,318 — — — — — 597,318 Sales (565,990) (2,046) (3,163) — — — (571,199) Issuances — — — — — (18,901) (18,901) Cash repayments / receipts (19,118) (9,246) (6,815) — — (17,268) (52,447) Transfers into Level III — — — — (259,701) (231,925) Transfers out of Level III — — — — — 108,123 108,123 Consolidation of VIEs — — 3,304 — 1,623,863 (23,095) 1,604,072 Deconsolidation of VIEs — — — — (372,812) 48,442 (324,370) September 30, 2018 balance $ 913,505 $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2018 $ (2,501) $ 2,526 $ (884) $ (974) $ (1,261,314) $ 371,310 $ (891,837) Domestic Loans Servicing VIE Three Months Ended September 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2017 balance $ 610,116 $ 256,397 $ 13,848 $ 38,648 $ 53,902,715 $ (2,164,593) $ 52,657,131 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 19,485 — (673) (4,867) (3,533,620) 151,273 (3,368,402) Net accretion — 3,187 — — — — 3,187 Included in OCI — 3,975 — — — — 3,975 Purchases / Originations 524,409 — 11,798 — — — 536,207 Sales (517,350) — — — — — (517,350) Issuances — — — — — (1,469) (1,469) Cash repayments / receipts (28,036) (10,307) (1,666) — — (4,910) (44,919) Transfers into Level III — — — — — (233,367) (233,367) Transfers out of Level III — — — — — 67,272 67,272 Consolidation of VIEs — — — — 964,564 (75,585) 888,979 Deconsolidation of VIEs — — 534 — (135,678) 1,596 (133,548) September 30, 2017 balance $ 608,624 $ 253,252 $ 23,841 $ 33,781 $ 51,197,981 $ (2,259,783) $ 49,857,696 Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2017 $ (2,597) $ 3,187 $ (230) $ (4,867) $ (3,533,620) $ 151,273 $ (3,386,854) Domestic Loans Servicing VIE Nine Months Ended September 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2018 balance $ 745,743 $ $ 24,191 $ 30,759 $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 26,669 241 76 (8,991) (5,055,029) 906,360 (4,130,674) Net accretion — 7,967 — — — — 7,967 Included in OCI — 2,923 — — — — 2,923 Purchases / Originations 1,508,010 — 1,463 — — — 1,509,473 Sales (2,853) (3,163) — — — (1,053,771) Issuances — — — — — (26,849) (26,849) Cash repayments / receipts (123,652) (27,432) (7,832) — — (75,078) (233,994) Transfers into Level III — — 27,776 — — (950,660) (922,884) Transfers out of Level III (195,510) — — — — 425,973 230,463 Consolidation of VIEs — — 3,304 — 3,438,933 (23,095) 3,419,142 Deconsolidation of VIEs — — — — (1,395,168) 139,081 (1,256,087) September 30, 2018 balance $ 913,505 $ $ 45,815 $ 21,768 $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2018 $ (2,023) $ 7,913 $ (1,252) $ (8,991) $ (5,055,029) $ 906,360 $ (4,145,260) Domestic Loans Servicing VIE Nine Months Ended September 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2017 balance $ 63,279 $ 253,915 $ 31,546 $ 55,082 $ 67,123,261 $ (2,585,369) $ 64,941,714 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — (4,359) (21,301) (15,773,529) 749,757 (15,003,948) OTTI — (109) — — — — (109) Net accretion — 10,375 — — — — 10,375 Included in OCI — 10,728 — — — — 10,728 Purchases / Originations 1,527,364 7,433 11,798 — — — 1,546,595 Sales (987,828) — (11,134) — — — (998,962) Issuances — — — — — (11,657) (11,657) Cash repayments / receipts (39,675) (29,090) (8,754) — — (40,946) (118,465) Transfers into Level III — — — — — (616,794) (616,794) Transfers out of Level III — — — — — 231,012 231,012 Consolidation of VIEs — — — — 2,092,516 (75,585) 2,016,931 Deconsolidation of VIEs — — 4,744 — (2,244,267) 89,799 (2,149,724) September 30, 2017 balance $ 608,624 $ 253,252 $ 23,841 $ 33,781 $ 51,197,981 $ (2,259,783) $ 49,857,696 Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2017 $ (2,621) $ 10,159 $ 56 $ (21,301) $ (15,773,529) $ 749,757 $ (15,037,479) |
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): September 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings $ 8,988,287 $ 9,043,997 $ 6,636,898 $ 6,729,302 HTM securities 473,896 474,395 433,468 428,338 Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ 8,660,835 $ 8,582,213 $ 5,847,241 $ 5,810,998 Unsecured senior notes 2,024,570 2,020,957 2,125,235 2,191,285 |
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) September 30, 2018 Technique Input September 30, 2018 December 31, 2017 Loans held-for-sale, fair value option $ 913,505 Discounted cash flow Yield (b) 4.7% - 6.0% 4.3% - 6.0% Duration (c) 2.2 - 11.5 years 1.8 - 12.1 years RMBS 227,867 Discounted cash flow Constant prepayment rate (a) 3.1% - 21.8% 2.5% - 21.4% Constant default rate (b) 1.0% - 5.5% 0.9% - 5.8% Loss severity (b) 0% - 79% (e) 14% - 75% (e) Delinquency rate (c) 4% - 32% 4% - 33% Servicer advances (a) 23% - 82% 20% - 83% Annual coupon deterioration (b) 0% - 1.3% 0% - 0.8% Putback amount per projected total collateral loss (d) 0% - 7% 0% - 7% CMBS 45,815 Discounted cash flow Yield (b) 0% - 207.5% 0% - 168.5% Duration (c) 0 - 9.7 years 0 - 9.7 years Domestic servicing rights 21,768 Discounted cash flow Debt yield (a) 7.75% 7.75% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets 48,034,610 Discounted cash flow Yield (b) 0% - 951.3% 0% - 826.6% Duration (c) 0 - 14.0 years 0 - 14.0 years VIE liabilities (1,793,205) Discounted cash flow Yield (b) 0% - 951.3% 0% - 826.6% Duration (c) 0 - 14.0 years 0 - 14.0 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 (higher or lower) 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. 58% and 81% of the portfolio falls within a range of 45%-80% as of September 30, 2018 and December 31, 2017, respectively. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 nine months ended September 30, 2018 and 2017 (dollars in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Federal statutory tax rate $ 20,509 21.0 % $ 35,915 35.0 % $ 68,406 21.0 % $ 118,010 35.0 % REIT and other non-taxable income (13,628) (13.9) % (26,242) (25.5) % (57,128) (17.6) % (99,668) (29.6) % State income taxes 1,803 1.8 % 200 0.2 % 2,954 0.9 % 81 — % Federal benefit of state tax deduction (378) (0.4) % (70) (0.1) % (620) (0.2) % (28) — % Other (25) — % 13 — % 868 0.3 % (110) — % Effective tax rate $ 8,281 8.5 % $ 9,816 9.6 % $ 14,480 4.4 % $ 18,285 5.4 % |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Data | |
Schedule of results of operations by business segment | The table below presents our results of operations for the three months ended September 30, 2018 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 147,913 $ 3,053 $ — $ 3,535 $ — $ 154,501 $ — $ 154,501 Interest income from investment securities 10,320 107 — 34,477 — 44,904 (33,396) 11,508 Servicing fees 98 — — 34,100 — 34,198 (6,374) 27,824 Rental income — — 76,067 15,065 — 91,132 — 91,132 Other revenues 265 44 169 229 89 796 (42) 754 Total revenues 158,596 3,204 76,236 87,406 89 325,531 (39,812) 285,719 Costs and expenses: Management fees 453 — — 18 25,937 26,408 111 26,519 Interest expense 43,322 2,258 19,483 7,396 30,475 102,934 (276) 102,658 General and administrative 7,016 537 1,680 19,131 2,753 31,117 86 31,203 Acquisition and investment pursuit costs 341 6,725 — (539) — 6,527 — 6,527 Costs of rental operations — — 23,052 7,139 — 30,191 — 30,191 Depreciation and amortization 17 — 28,448 5,828 — 34,293 — 34,293 Loan loss allowance, net 929 — — — — 929 — 929 Other expense 76 — — — — 76 — 76 Total costs and expenses 52,154 9,520 72,663 38,973 59,165 232,475 (79) 232,396 Income (loss) before other income (loss), income taxes and non-controlling interests 106,442 (6,316) 3,573 48,433 (59,076) 93,056 (39,733) 53,323 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 33,289 33,289 Change in fair value of servicing rights — — — (1,994) — (1,994) 1,020 (974) Change in fair value of investment securities, net 238 — — (4,966) — (4,728) 5,029 301 Change in fair value of mortgage loans held-for-sale, net 1,343 — — 2,597 — 3,940 — 3,940 Earnings (loss) from unconsolidated entities 514 — 1,988 (134) — 2,368 257 2,625 Gain on sale of investments and other assets, net 47 — — 1,415 — 1,462 — 1,462 Gain (loss) on derivative financial instruments, net 7,278 455 5,895 3,076 (4,969) 11,735 — 11,735 Foreign currency loss, net (3,546) (531) (1) — — (4,078) — (4,078) Loss on extinguishment of debt (730) — — — (1,810) (2,540) — (2,540) Other income (loss), net (1) — 2 (1,422) — (1,421) — (1,421) Total other income (loss) 5,143 (76) 7,884 (1,428) (6,779) 4,744 39,595 44,339 Income (loss) before income taxes 111,585 (6,392) 11,457 47,005 (65,855) 97,800 (138) 97,662 Income tax provision (314) — (125) (7,842) — (8,281) — (8,281) Net income (loss) 111,271 (6,392) 11,332 39,163 (65,855) 89,519 (138) 89,381 Net (income) loss attributable to non-controlling interests (365) — (4,769) 151 — (4,983) 138 (4,845) Net income (loss) attributable to Starwood Property Trust, Inc . $ 110,906 $ (6,392) $ 6,563 $ 39,314 $ (65,855) $ 84,536 $ — $ 84,536 The table below presents our results of operations for the three months ended September 30, 2017 by business segment (amounts in thousands): Commercial and Residential Investing Lending Property and Servicing Securitization Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 134,149 $ — $ 4,450 $ — $ 138,599 $ — $ 138,599 Interest income from investment securities 11,540 — 31,740 — 43,280 (30,829) 12,451 Servicing fees 142 — 23,093 — 23,235 (8,393) 14,842 Rental income — 47,663 12,490 — 60,153 — 60,153 Other revenues 181 164 441 — 786 (64) 722 Total revenues 146,012 47,827 72,214 — 266,053 (39,286) 226,767 Costs and expenses: Management fees 482 — 18 30,370 30,870 110 30,980 Interest expense 27,929 11,360 5,710 31,709 76,708 (277) 76,431 General and administrative 5,302 1,090 24,167 2,251 32,810 82 32,892 Acquisition and investment pursuit costs 807 245 (28) — 1,024 — 1,024 Costs of rental operations — 18,660 5,139 — 23,799 — 23,799 Depreciation and amortization 17 17,852 5,002 — 22,871 — 22,871 Loan loss allowance, net (171) — — — (171) — (171) Other expense 72 97 207 — 376 — 376 Total costs and expenses 34,438 49,304 40,215 64,330 188,287 (85) 188,202 Income (loss) before other income (loss), income taxes and non-controlling interests 111,574 (1,477) 31,999 (64,330) 77,766 (39,201) 38,565 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 56,177 56,177 Change in fair value of servicing rights — — (5,652) — (5,652) 785 (4,867) Change in fair value of investment securities, net 276 — 13,962 — 14,238 (14,635) (397) Change in fair value of mortgage loans held-for-sale, net (397) — 19,882 — 19,485 — 19,485 Earnings (loss) from unconsolidated entities 848 (33,731) 30,225 — (2,658) (2,031) (4,689) Gain on sale of investments and other assets, net — — 11,877 — 11,877 — 11,877 Loss on derivative financial instruments, net (10,813) (11,276) (2,135) — (24,224) — (24,224) Foreign currency gain (loss), net 10,657 (1) 4 — 10,660 — 10,660 Other income, net — — 28 — 28 — 28 Total other income (loss) 571 (45,008) 68,191 — 23,754 40,296 64,050 Income (loss) before income taxes 112,145 (46,485) 100,190 (64,330) 101,520 1,095 102,615 Income tax benefit (provision ) 11 — (9,827) — (9,816) — (9,816) Net income (loss) 112,156 (46,485) 90,363 (64,330) 91,704 1,095 92,799 Net income attributable to non-controlling interests (357) — (2,919) — (3,276) (1,095) (4,371) Net income (loss) attributable to Starwood Property Trust, Inc . $ 111,799 $ (46,485) $ 87,444 $ (64,330) $ 88,428 $ — $ 88,428 The table below presents our results of operations for the nine months ended September 30, 2018 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 431,153 $ 3,053 $ — $ 9,619 $ — $ 443,825 $ — $ 443,825 Interest income from investment securities 33,689 107 — 99,348 — 133,144 (95,577) 37,567 Servicing fees 313 — — 92,221 — 92,534 (21,328) 71,206 Rental income — — 217,178 43,955 — 261,133 — 261,133 Other revenues 683 44 351 973 227 2,278 (147) 2,131 Total revenues 465,838 3,204 217,529 246,116 227 932,914 (117,052) 815,862 Costs and expenses: Management fees 1,396 — — 54 82,895 84,345 310 84,655 Interest expense 110,169 2,258 55,397 18,298 96,132 282,254 (821) 281,433 General and administrative 19,962 537 5,510 64,006 8,602 98,617 256 98,873 Acquisition and investment pursuit costs 2,253 6,725 (46) (467) — 8,465 — 8,465 Costs of rental operations — — 72,531 20,250 — 92,781 — 92,781 Depreciation and amortization 50 — 86,655 16,482 — 103,187 — 103,187 Loan loss allowance, net 27,726 — — — — 27,726 — 27,726 Other expense 230 — — 447 — 677 — 677 Total costs and expenses 161,786 9,520 220,047 119,070 187,629 698,052 (255) 697,797 Income (loss) before other income (loss), income taxes and non-controlling interests 304,052 (6,316) (2,518) 127,046 (187,402) 234,862 (116,797) 118,065 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 129,888 129,888 Change in fair value of servicing rights — — — (14,417) — (14,417) 5,426 (8,991) Change in fair value of investment securities, net 16 — — 24,123 — 24,139 (16,285) 7,854 Change in fair value of mortgage loans held-for-sale, net (165) — — 26,738 — 26,573 — 26,573 Earnings from unconsolidated entities 3,761 — 1,406 2,916 — 8,083 (1,450) 6,633 Gain on sale of investments and other assets, net 461 — 6,883 18,215 — 25,559 — 25,559 Gain (loss) on derivative financial instruments, net 15,927 455 27,734 7,720 (24,338) 27,498 — 27,498 Foreign currency loss, net (3,260) (531) — (2) — (3,793) — (3,793) Loss on extinguishment of debt (730) — — (186) (1,810) (2,726) — (2,726) Other income (loss), net 42 — 508 (1,365) — (815) — (815) Total other income (loss) 16,052 (76) 36,531 63,742 (26,148) 90,101 117,579 207,680 Income (loss) before income taxes 320,104 (6,392) 34,013 190,788 (213,550) 324,963 782 325,745 Income tax provision (2,981) — (1,997) (9,502) — (14,480) — (14,480) Net income (loss) 317,123 (6,392) 32,016 181,286 (213,550) 310,483 782 311,265 Net income attributable to non-controlling interests (1,087) — (11,906) (3,792) — (16,785) (782) (17,567) Net income (loss) attributable to Starwood Property Trust, Inc . $ 316,036 $ (6,392) $ 20,110 $ 177,494 $ (213,550) $ 293,698 $ — $ 293,698 The table below presents our results of operations for the nine months ended September 30, 2017 by business segment (amounts in thousands): Commercial and Residential Investing Lending Property and Servicing Securitization Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 360,188 $ — $ 10,906 $ — $ 371,094 $ — $ 371,094 Interest income from investment securities 35,870 — 104,768 — 140,638 (100,593) 40,045 Servicing fees 568 — 86,837 — 87,405 (39,833) 47,572 Rental income — 138,795 37,366 — 176,161 — 176,161 Other revenues 553 430 1,450 — 2,433 (249) 2,184 Total revenues 397,179 139,225 241,327 — 777,731 (140,675) 637,056 Costs and expenses: Management fees 1,405 — 54 78,328 79,787 210 79,997 Interest expense 72,372 32,466 14,924 94,667 214,429 (821) 213,608 General and administrative 14,872 3,471 69,536 7,719 95,598 243 95,841 Acquisition and investment pursuit costs 1,707 516 9 — 2,232 — 2,232 Costs of rental operations — 51,843 15,858 — 67,701 — 67,701 Depreciation and amortization 50 52,288 14,793 — 67,131 — 67,131 Loan loss allowance, net (3,170) — — — (3,170) — (3,170) Other expense 72 63 1,141 — 1,276 — 1,276 Total costs and expenses 87,308 140,647 116,315 180,714 524,984 (368) 524,616 Income (loss) before other income (loss), income taxes and non-controlling interests 309,871 (1,422) 125,012 (180,714) 252,747 (140,307) 112,440 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 203,108 203,108 Change in fair value of servicing rights — — (28,956) — (28,956) 7,655 (21,301) Change in fair value of investment securities, net 299 — 45,263 — 45,562 (49,623) (4,061) Change in fair value of mortgage loans held-for-sale, net (549) — 46,033 — 45,484 — 45,484 Earnings (loss) from unconsolidated entities 2,548 (28,782) 67,134 — 40,900 (13,137) 27,763 (Loss) gain on sale of investments and other assets, net (59) 77 16,986 — 17,004 — 17,004 Loss on derivative financial instruments, net (30,274) (32,268) (3,617) — (66,159) — (66,159) Foreign currency gain, net 28,402 16 16 — 28,434 — 28,434 OTTI (109) — — — (109) — (109) Loss on extinguishment of debt — — — (5,916) (5,916) — (5,916) Other income, net — — 1,097 — 1,097 (613) 484 Total other income (loss) 258 (60,957) 143,956 (5,916) 77,341 147,390 224,731 Income (loss) before income taxes 310,129 (62,379) 268,968 (186,630) 330,088 7,083 337,171 Income tax provision (331) — (17,954) — (18,285) — (18,285) Net income (loss) 309,798 (62,379) 251,014 (186,630) 311,803 7,083 318,886 Net income attributable to non-controlling interests (1,064) — (2,573) — (3,637) (7,083) (10,720) Net income (loss) attributable to Starwood Property Trust, Inc . $ 308,734 $ (62,379) $ 248,441 $ (186,630) $ 308,166 $ — $ 308,166 |
Schedule of condensed consolidated balance sheet by business segment | The table below presents our condensed consolidated balance sheet as of September 30, 2018 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 15,217 $ 8 $ 23,496 $ 44,771 $ 180,946 $ 264,438 $ 1,319 $ 265,757 Restricted cash 34,325 28,222 18,239 14,508 28,970 124,264 — 124,264 Loans held-for-investment, net 7,004,938 — 3,460 — 8,500,674 — 8,500,674 Loans held-for-sale 719,781 320,270 — 286,786 — 1,326,837 — 1,326,837 Loans transferred as secured borrowings 74,281 — — — — 74,281 — 74,281 Investment securities 718,262 65,060 — — 1,810,876 (1,047,426) 763,450 Properties, net — — 268,517 — 2,888,737 — 2,888,737 Properties held-for-sale — — 31,928 20,374 — 52,302 — 52,302 Intangible assets — — 96,348 80,420 — 176,768 (22,820) 153,948 Investment in unconsolidated entities 34,334 — 112,110 43,804 — 190,248 (21,460) 168,788 Goodwill — 115,988 — 140,437 — 256,425 — 256,425 Derivative assets 15,232 481 41,461 2,633 — 59,807 — 59,807 Accrued interest receivable 42,080 6,356 269 1,090 3,243 53,038 (127) 52,911 Other assets 38,604 8,398 99,412 49,882 2,399 198,695 (7) 198,688 VIE assets, at fair value — — — — — — 48,034,610 48,034,610 Total Assets $ 8,697,054 $ $ $ $ 215,558 $ 15,977,390 $ 46,944,089 $ 62,921,479 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,681 $ 10,889 $ 71,253 $ 80,353 $ 28,600 $ 214,776 $ 126 $ 214,902 Related-party payable — — — 74 25,212 25,286 — 25,286 Dividends payable — — — — 132,549 132,549 — 132,549 Derivative liabilities 3,015 381 2,276 251 29,463 35,386 — 35,386 Secured financing agreements, net 4,117,051 759,012 297,655 8,610,387 (23,700) 8,586,687 Unsecured senior notes, net — — — — 2,024,570 2,024,570 — 2,024,570 Secured borrowings on transferred loans, net 74,148 — — — — 74,148 — 74,148 VIE liabilities, at fair value — — — — — — 46,945,674 46,945,674 Total Liabilities 4,217,895 839,690 2,538,049 11,117,102 46,922,100 58,039,202 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — 2,793 2,793 — 2,793 Additional paid-in capital 1,481,943 525,108 809,734 270,045 1,876,231 4,963,061 — 4,963,061 Treasury stock — — — — (104,194) (104,194) — (104,194) Accumulated other comprehensive income (loss) 60,811 — 7,171 (62) — 67,920 — 67,920 Retained earnings (accumulated deficit) 2,926,015 (6,392) 5,775 863,580 (4,097,321) (308,343) — (308,343) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,468,769 518,716 822,680 (2,322,491) 4,621,237 — 4,621,237 Non-controlling interests in consolidated subsidiaries 10,390 — 217,678 10,983 — 239,051 21,989 261,040 Total Equity 4,479,159 518,716 (2,322,491) 4,860,288 21,989 4,882,277 Total Liabilities and Equity $ 8,697,054 $ $ $ $ 215,558 $ 15,977,390 $ 46,944,089 $ 62,921,479 The table below presents our condensed consolidated balance sheet as of December 31, 2017 by business segment (amounts in thousands): Commercial and Residential Investing Lending Property and Servicing Securitization Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 14,580 $ 10,388 $ 39,446 $ 299,308 $ 363,722 $ 5,726 $ 369,448 Restricted cash 21,555 12,491 10,289 4,490 48,825 — 48,825 Loans held-for-investment, net 6,558,699 — 3,796 — 6,562,495 — 6,562,495 Loans held-for-sale 613,287 — 132,456 — 745,743 — 745,743 Loans transferred as secured borrowings 74,403 — — — 74,403 — 74,403 Investment securities 694,012 — 1,024,143 — 1,718,155 (999,952) 718,203 Properties, net — 2,364,806 282,675 — 2,647,481 — 2,647,481 Intangible assets — 116,081 95,257 — 211,338 (28,246) 183,092 Investment in unconsolidated entities 45,028 110,704 50,759 — 206,491 (20,988) 185,503 Goodwill — — 140,437 — 140,437 — 140,437 Derivative assets 6,487 26,775 636 — 33,898 — 33,898 Accrued interest receivable 46,650 68 243 786 47,747 — 47,747 Other assets 5,648 71,929 59,676 3,755 141,008 (2,868) 138,140 VIE assets, at fair value — — — — — 51,045,874 51,045,874 Total Assets $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,054 $ 62,890 $ 74,426 $ 23,536 $ 183,906 $ 1,211 $ 185,117 Related-party payable 20 — 31 42,318 42,369 — 42,369 Dividends payable — — — 125,916 125,916 — 125,916 Derivative liabilities 20,386 13,063 85 2,666 36,200 — 36,200 Secured financing agreements, net 3,466,487 1,621,885 411,526 296,858 5,796,756 (23,700) 5,773,056 Unsecured senior notes, net — — — 2,125,235 2,125,235 — 2,125,235 Secured borrowings on transferred loans 74,185 — — — 74,185 — 74,185 VIE liabilities, at fair value — — — — — 50,000,010 50,000,010 Total Liabilities 3,584,132 1,697,838 486,068 2,616,529 8,384,567 49,977,521 58,362,088 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — 2,660 2,660 — 2,660 Additional paid-in capital 1,818,559 957,329 659,062 1,280,296 4,715,246 — 4,715,246 Treasury stock — — — (92,104) (92,104) — (92,104) Accumulated other comprehensive income (loss) 57,914 12,076 (66) — 69,924 — 69,924 Retained earnings (accumulated deficit) 2,609,050 (14,335) 687,015 (3,499,042) (217,312) — (217,312) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,485,523 955,070 1,346,011 (2,308,190) 4,478,414 — 4,478,414 Non-controlling interests in consolidated subsidiaries 10,694 60,334 7,734 — 78,762 22,025 100,787 Total Equity 4,496,217 1,015,404 1,353,745 (2,308,190) 4,557,176 22,025 4,579,201 Total Liabilities and Equity $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 |
Business and Organization (Deta
Business and Organization (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
Business and Organization | |
Number of reportable business segments | 4 |
Minimum annual REIT taxable income distributable to stockholders (as a percent) | 90.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - VIE & Fair Value (Details) $ in Millions | Sep. 30, 2018USD ($) |
Variable Interest Entities | |
REO assets as a percent of consolidated VIE assets | 2.00% |
Loans as a percent of consolidated VIE assets | 98.00% |
Fair Value Measurements | |
Permitted reinvestment under static investment in VIEs | $ 0 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures (Details) $ / shares in Units, $ in Thousands | Oct. 15, 2018USD ($)propertysecurity | Sep. 30, 2018USD ($) | Sep. 19, 2018USD ($) | Dec. 31, 2017USD ($)item | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2018USD ($)property | Sep. 30, 2018USD ($)item | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)shares | Mar. 31, 2018USD ($)propertyitemshares | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($)property$ / shares | Mar. 31, 2018USD ($)shares | Sep. 30, 2018USD ($)propertyitem$ / sharesshares | Sep. 30, 2017USD ($)propertyitem$ / shares | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item |
Acquisitions and Divestitures | |||||||||||||||||||
Principal Amount | $ 2,055,908 | $ 2,161,344 | $ 2,055,908 | $ 2,055,908 | $ 2,055,908 | $ 2,055,908 | $ 2,055,908 | $ 2,055,908 | $ 2,161,344 | $ 2,055,908 | $ 2,161,344 | ||||||||
Interest income from loans | 154,501 | $ 138,599 | 443,825 | $ 371,094 | |||||||||||||||
Interest Expense | 102,658 | 76,431 | 281,433 | 213,608 | |||||||||||||||
Foreign Currency Transaction Gain (Loss), before Tax | (4,078) | 10,660 | (3,793) | 28,434 | |||||||||||||||
Gain on sale of property | 1,400 | 11,200 | 25,100 | 16,400 | |||||||||||||||
Capitalized acquisition costs | 500 | 500 | 500 | 500 | 500 | 500 | 500 | $ 500 | |||||||||||
Number of business days after the closing of the final property | item | 3 | ||||||||||||||||||
Redemption cost | shares | 0 | ||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Goodwill | 256,425 | $ 140,437 | $ 256,425 | $ 256,425 | $ 256,425 | $ 256,425 | 256,425 | 256,425 | 140,437 | $ 256,425 | 140,437 | ||||||||
Pro forma revenue and net income | |||||||||||||||||||
Revenues | 308,320 | 248,549 | 886,931 | 698,952 | |||||||||||||||
Net income attributable to STWD | 90,821 | $ 88,367 | $ 300,288 | $ 302,485 | |||||||||||||||
Net income per share - Basic | $ / shares | $ 0.34 | $ 0.34 | $ 1.13 | $ 1.16 | |||||||||||||||
Net income per share - Diluted | $ / shares | $ 0.34 | $ 0.33 | $ 1.11 | $ 1.14 | |||||||||||||||
Class A Units | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Redemption cost | shares | 0 | ||||||||||||||||||
Infrastructure Lending Segment | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Funded commitments | $ 1,900,000 | ||||||||||||||||||
Unfunded commitments | $ 466,300 | ||||||||||||||||||
Floating rate | 97 | ||||||||||||||||||
Principal Amount | $ 1,500,000 | ||||||||||||||||||
Revenue | 3,200 | ||||||||||||||||||
Net income | (5,500) | ||||||||||||||||||
Interest income from loans | 3,200 | ||||||||||||||||||
Interest Expense | 2,300 | ||||||||||||||||||
Bridge facility cancellation fee | 3,000 | ||||||||||||||||||
Legal and due diligence costs | 2,800 | ||||||||||||||||||
Assets acquired: | |||||||||||||||||||
Loans held-for-investment | 1,506,544 | ||||||||||||||||||
Loans held-for-sale | 319,879 | ||||||||||||||||||
Investment securities | 65,060 | ||||||||||||||||||
Accrued interest receivable | 12,566 | ||||||||||||||||||
Total assets acquired | 1,904,049 | ||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | 8,327 | ||||||||||||||||||
Derivative liabilities | 282 | ||||||||||||||||||
Total liabilities assumed | 8,609 | ||||||||||||||||||
Net assets acquired | 1,895,440 | ||||||||||||||||||
Purchase price | 2,011,428 | ||||||||||||||||||
Goodwill | $ 115,988 | ||||||||||||||||||
Infrastructure Lending Segment | Subsequent event | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Number of properties in portfolio investment | property | 2 | ||||||||||||||||||
Number of loans in portfolio investment | security | 2 | ||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Purchase price | $ 147,100 | ||||||||||||||||||
Available financing used to fund acquisition | $ 120,400 | ||||||||||||||||||
Infrastructure Lending Segment | US | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Collateral percentage | 74 | ||||||||||||||||||
Infrastructure Lending Segment | MEXICO | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Collateral percentage | 11 | ||||||||||||||||||
Infrastructure Lending Segment | UNITED KINGDOM | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Collateral percentage | 6 | ||||||||||||||||||
Woodstar II Portfolio | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Principal Amount | $ 300,900 | $ 300,900 | |||||||||||||||||
Number of properties in portfolio investment | 27 | 18 | 27 | ||||||||||||||||
Number of acquired properties closed | 8 | 18 | |||||||||||||||||
Number of units acquired | 1,740 | 6,109 | 312 | 4,057 | |||||||||||||||
Percentage of occupied portfolio | 99.00% | ||||||||||||||||||
Initial aggregate purchase price | 33,400 | $ 33,400 | $ 33,400 | $ 33,400 | $ 33,400 | 33,400 | 33,400 | $ 404,700 | 404,700 | $ 33,400 | |||||||||
Contingent consideration | 2,500 | $ 10,800 | 2,500 | 2,500 | 2,500 | 2,500 | 2,500 | 2,500 | 26,700 | 10,800 | 26,700 | 2,500 | 10,800 | ||||||
Capitalized acquisition costs | $ 3,600 | $ 3,600 | |||||||||||||||||
Amount issued | $ 116,700 | $ 116,700 | $ 116,700 | ||||||||||||||||
Interest rate (as a percent) | 3.81% | 3.82% | 3.81% | 3.82% | 3.81% | ||||||||||||||
Maturity period | 10 years | 10 years | |||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Total liabilities assumed | 439,000 | 439,000 | 439,000 | 439,000 | 439,000 | 439,000 | $ 439,000 | $ 439,000 | |||||||||||
Purchase price | $ 156,200 | 30,900 | $ 378,000 | ||||||||||||||||
Woodstar II Portfolio | Class A Units | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Shares issued | shares | 424,642 | 6,979,089 | 10,183,505 | ||||||||||||||||
Woodstar II Portfolio | SPT Dolphin | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Aggregate gross acquisition price | 2,600 | $ 223,300 | $ 310,700 | ||||||||||||||||
Woodstar II Portfolio | SPT Dolphin | Class A Units | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Period after issuance date for redemption | 6 months | ||||||||||||||||||
Number of common stock per unit | item | 1 | ||||||||||||||||||
Right to receive additional shares | shares | 110,228 | 1,301,414 | 1,910,563 | ||||||||||||||||
Woodstar II Portfolio | Additional Mortgage Facilities Acquired | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Amount issued | $ 19,700 | $ 19,700 | $ 19,700 | $ 19,700 | $ 19,700 | $ 19,700 | $ 19,700 | $ 7,300 | $ 7,300 | $ 19,700 | |||||||||
Interest rate (as a percent) | 3.19% | 3.19% | 3.19% | 3.19% | 3.19% | 3.19% | 3.19% | 2.88% | 2.88% | 3.19% | |||||||||
Woodstar II Portfolio | Additional Mortgage Facilities Acquired | Weighted-average | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Maturity period | 17 years 8 months 12 days | 34 years | |||||||||||||||||
Master Lease Mortgages | |||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Total liabilities assumed | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | |||||||||||
Ireland Portfolio | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Number of properties sold | item | 1 | ||||||||||||||||||
Proceeds from sale of property | 0 | $ 3,900 | |||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Total liabilities assumed | $ 336,600 | ||||||||||||||||||
Non-Controlling Interests | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Gain on sale of property | 0 | 3,700 | |||||||||||||||||
LNR | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Payment to acquire investment property | $ 52,700 | ||||||||||||||||||
Number of properties in portfolio investment | property | 3 | ||||||||||||||||||
Aggregate gross acquisition price | $ 53,100 | ||||||||||||||||||
Number of real estate business acquired | 0 | 3 | 19 | 19 | 19 | ||||||||||||||
Number of properties sold | property | 1 | 2 | 6 | 4 | |||||||||||||||
Proceeds from sale of property | 8,700 | $ 26,000 | $ 48,700 | $ 40,700 | |||||||||||||||
Gain on sale of property | 1,400 | 11,200 | 18,200 | 16,300 | |||||||||||||||
Amount of non-controlling interest already held by a purchaser of a property | 300 | 300 | |||||||||||||||||
Liabilities assumed: | |||||||||||||||||||
Total liabilities assumed | 225,300 | 225,300 | $ 225,300 | 225,300 | 225,300 | 225,300 | 225,300 | 225,300 | |||||||||||
Purchase price | $ 273,600 | $ 273,600 | $ 273,600 | ||||||||||||||||
Goodwill | $ 140,400 | $ 140,400 | $ 140,400 | $ 140,400 | $ 140,400 | $ 140,400 | 140,400 | $ 140,400 | $ 140,400 | 140,400 | $ 140,400 | ||||||||
LNR | Non-Controlling Interests | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Gain on sale of property | $ 0 | $ 2,400 | $ 3,700 | $ 2,400 | |||||||||||||||
Disposed of by sale | Master Lease Mortgages | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Number of properties sold | property | 3 | ||||||||||||||||||
Proceeds from sale of property | $ 55,600 | ||||||||||||||||||
Gain on sale of property | $ 6,900 | ||||||||||||||||||
Disposed of by sale | Master Lease Portfolio, REO Portfolio, Medical Office Portfolio and Woodstar Portfolio | |||||||||||||||||||
Acquisitions and Divestitures | |||||||||||||||||||
Number of properties sold | property | 0 | 0 |
Loans - Held for Investment (De
Loans - Held for Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments in loans | |||||
Total gross loans | $ 9,933,848 | $ 9,933,848 | $ 7,386,971 | ||
Loan loss allowance (loans held-for-investment) | (32,056) | (32,056) | $ (6,618) | (4,330) | $ (9,788) |
Carrying amount of commercial loans | 286,786 | ||||
Carrying Value | 9,901,792 | 9,901,792 | 7,382,641 | ||
Proceeds from borrowings | 6,845,138 | 4,090,163 | |||
Payment of debt | 3,880,450 | $ 2,724,179 | |||
Face Amount | 9,964,342 | 9,964,342 | 7,397,182 | ||
Loans with variable rates of interest | $ 8,100,000 | $ 8,100,000 | |||
Loans with variable rates of interest (as a percent) | 94.50% | 94.50% | |||
Weighted average spread of loans (as a percent) | 4.40% | 4.40% | |||
Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | $ 8,532,730 | $ 8,532,730 | 6,566,825 | ||
Face Amount | 8,575,342 | 8,575,342 | 6,595,684 | ||
Loans held-for-sale | |||||
Investments in loans | |||||
Total gross loans | 1,326,837 | 1,326,837 | 745,743 | ||
Loans held-for-sale, residential | |||||
Investments in loans | |||||
Total gross loans | 626,719 | 626,719 | 613,287 | ||
Face Amount | 607,616 | $ 607,616 | $ 594,105 | ||
Weighted Average Life | 5 years 3 months 18 days | 5 years 4 months 24 days | |||
Loans held-for-sale, residential | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 6.30% | 6.20% | |||
Loans held-for-sale, commercial | |||||
Investments in loans | |||||
Total gross loans | 379,848 | $ 379,848 | $ 132,456 | ||
Face Amount | 382,270 | $ 382,270 | $ 132,393 | ||
Weighted Average Life | 8 years 4 months 24 days | 10 years | |||
Loans held-for-sale, commercial | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 4.80% | 4.60% | |||
Loans Held For Sale Infrastructure | |||||
Investments in loans | |||||
Total gross loans | 320,270 | $ 320,270 | |||
Face Amount | 324,422 | $ 324,422 | |||
Weighted Average Life | 5 years 8 months 12 days | ||||
Loans Held For Sale Infrastructure | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 3.40% | ||||
Loans transferred as secured borrowings | |||||
Investments in loans | |||||
Total gross loans | 74,281 | $ 74,281 | $ 74,403 | ||
Face Amount | 74,692 | $ 74,692 | $ 75,000 | ||
Weighted Average Life | 1 year 6 months | 2 years 3 months 18 days | |||
Loans transferred as secured borrowings | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 6.90% | 6.20% | |||
First mortgage loan participation | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 6,474,478 | $ 6,474,478 | $ 5,818,804 | ||
Face Amount | 6,496,376 | $ 6,496,376 | $ 5,843,623 | ||
Weighted Average Life | 2 years 1 month 6 days | 2 years | |||
First mortgage loan participation | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 6.70% | 6.20% | |||
First priority infrastructure receivables | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 1,492,276 | $ 1,492,276 | |||
Face Amount | 1,510,157 | $ 1,510,157 | |||
Weighted Average Life | 3 years 6 months | ||||
First priority infrastructure receivables | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 5.10% | ||||
Mortgage, Residual Profit Participation | Retail and Hospitality Property | |||||
Investments in loans | |||||
Total distributions received from residual profit participation | 2,800 | $ 15,100 | |||
Subordinated mortgages | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 188,402 | 188,402 | $ 177,115 | ||
Face Amount | 188,266 | $ 188,266 | $ 177,386 | ||
Weighted Average Life | 1 year 3 months 18 days | 1 year 10 months 24 days | |||
Subordinated mortgages | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 11.50% | 10.80% | |||
Mezzanine Loans | |||||
Investments in loans | |||||
Carrying Value | 1,000,000 | $ 1,000,000 | $ 851,100 | ||
Mezzanine Loans | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 352,300 | 352,300 | 545,299 | ||
Face Amount | 351,866 | $ 351,866 | $ 545,355 | ||
Weighted Average Life | 1 year 9 months 18 days | 1 year 1 month 6 days | |||
Mezzanine Loans | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 10.80% | 11.00% | |||
Other | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 25,274 | $ 25,274 | $ 25,607 | ||
Face Amount | $ 28,677 | $ 28,677 | $ 29,320 | ||
Weighted Average Life | 3 years 6 months | 3 years 10 months 24 days | |||
Other | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 8.70% | 8.50% |
Loans - Ratings (Details)
Loans - Ratings (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Investments in loans | |||||
Total gross loans | $ 9,933,848 | $ 9,933,848 | $ 7,386,971 | ||
Total gross loans (as a percent) | 100.00% | 100.00% | 100.00% | ||
Provision for Loan Losses Net | $ 929 | $ (171) | $ 27,726 | $ (3,170) | |
Provision for Impaired Losses | 0 | 29,853 | |||
Average recorded investment | 189,600 | 188,600 | |||
Mortgage Loans on Real Estate Capitalized, Interest | 44,293 | $ 55,987 | |||
Carrying amount of loans 90 days or more past due | 3,600 | 3,600 | |||
New York City | |||||
Investments in loans | |||||
Provision for Impaired Losses | 21,600 | ||||
Rating 1 | |||||
Investments in loans | |||||
Total gross loans | $ 21,105 | $ 21,105 | $ 22,270 | ||
Total gross loans (as a percent) | 0.20% | 0.20% | 0.30% | ||
Rating 1 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 65.00% | 65.00% | |||
Rating 2 | |||||
Investments in loans | |||||
Total gross loans | $ 3,122,563 | $ 3,122,563 | $ 2,611,998 | ||
Total gross loans (as a percent) | 31.40% | 31.40% | 35.40% | ||
Rating 2 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 70.00% | 70.00% | |||
Rating 3 | |||||
Investments in loans | |||||
Total gross loans | $ 3,683,825 | $ 3,683,825 | $ 3,836,019 | ||
Total gross loans (as a percent) | 37.10% | 37.10% | 51.90% | ||
Rating 3 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 80.00% | 80.00% | |||
Rating 4 | |||||
Investments in loans | |||||
Total gross loans | $ 78,028 | $ 78,028 | $ 120,479 | ||
Total gross loans (as a percent) | 0.80% | 0.80% | 1.60% | ||
Allowance for loan losses as a percent of carrying amount | 1.50% | ||||
Rating 4 | Minimum | |||||
Investments in loans | |||||
LTV (as a percent) | 80.00% | 80.00% | |||
Rating 4 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 90.00% | 90.00% | |||
Rating 5 | |||||
Investments in loans | |||||
Total gross loans | $ 20,667 | $ 20,667 | $ 50,462 | ||
Total gross loans (as a percent) | 0.20% | 0.20% | 0.70% | ||
Allowance for loan losses as a percent of carrying amount | 5.00% | ||||
Rating 5 | Minimum | |||||
Investments in loans | |||||
LTV (as a percent) | 90.00% | 90.00% | |||
N/A | |||||
Investments in loans | |||||
Total gross loans | $ 1,680,823 | $ 1,680,823 | |||
Total gross loans (as a percent) | 16.90% | 16.90% | |||
Total | |||||
Investments in loans | |||||
Total gross loans | $ 8,607,011 | $ 8,607,011 | $ 6,641,228 | ||
First Mortgages, excluding Cost Recovery Loans | New York City | |||||
Investments in loans | |||||
Recorded investment | 118,300 | 118,300 | |||
Unpaid principal balance | 118,500 | 118,500 | |||
Provision for Impaired Losses | 5,500 | ||||
Subordinated mortgages | Greater Chicogo | |||||
Investments in loans | |||||
Recorded investment | 12,200 | 12,200 | |||
Unpaid principal balance | 12,000 | 12,000 | |||
Provision for Impaired Losses | $ 8,300 | ||||
Number of Subordinated Mortgages | item | 2 | ||||
Mezzanine Loans | |||||
Investments in loans | |||||
Unfunded commitment | 6,300 | $ 6,300 | |||
Mezzanine Loans | New York City | |||||
Investments in loans | |||||
Recorded investment | 52,700 | 52,700 | |||
Unpaid principal balance | 52,800 | 52,800 | |||
Provision for Impaired Losses | 16,100 | ||||
Unsecured promissory note | New York City | |||||
Investments in loans | |||||
Recorded investment | 5,600 | 5,600 | |||
Unpaid principal balance | 5,700 | 5,700 | |||
Provision for Impaired Losses | 0 | ||||
Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 8,532,730 | 8,532,730 | 6,566,825 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 1 | |||||
Investments in loans | |||||
Total gross loans | 1,433 | 1,433 | 2,003 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 2,917,836 | 2,917,836 | 2,462,268 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 3,285,546 | 3,285,546 | 3,183,592 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 4 | |||||
Investments in loans | |||||
Total gross loans | 78,028 | 78,028 | 120,479 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 5 | |||||
Investments in loans | |||||
Total gross loans | 20,667 | 20,667 | 50,462 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | N/A | |||||
Investments in loans | |||||
Total gross loans | 170,968 | 170,968 | |||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Total | |||||
Investments in loans | |||||
Total gross loans | 6,474,478 | 6,474,478 | 5,818,804 | ||
Total loans held-for-investment | First Priority Infrastructure Loans | N/A | |||||
Investments in loans | |||||
Total gross loans | 1,492,276 | 1,492,276 | |||
Total loans held-for-investment | First Priority Infrastructure Loans | Total | |||||
Investments in loans | |||||
Total gross loans | 1,492,276 | 1,492,276 | |||
Total loans held-for-investment | Subordinated mortgages | |||||
Investments in loans | |||||
Total gross loans | 188,402 | 188,402 | 177,115 | ||
Total loans held-for-investment | Subordinated mortgages | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 11,752 | 11,752 | 11,927 | ||
Total loans held-for-investment | Subordinated mortgages | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 164,673 | 164,673 | 165,188 | ||
Total loans held-for-investment | Subordinated mortgages | N/A | |||||
Investments in loans | |||||
Total gross loans | 11,977 | 11,977 | |||
Total loans held-for-investment | Subordinated mortgages | Total | |||||
Investments in loans | |||||
Total gross loans | 188,402 | 188,402 | 177,115 | ||
Total loans held-for-investment | Mezzanine Loans | |||||
Investments in loans | |||||
Total gross loans | 352,300 | 352,300 | 545,299 | ||
Total loans held-for-investment | Mezzanine Loans | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 118,694 | 118,694 | 137,803 | ||
Total loans held-for-investment | Mezzanine Loans | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 233,606 | 233,606 | 407,496 | ||
Total loans held-for-investment | Mezzanine Loans | Total | |||||
Investments in loans | |||||
Total gross loans | 352,300 | 352,300 | 545,299 | ||
Total loans held-for-investment | Other | |||||
Investments in loans | |||||
Total gross loans | 25,274 | 25,274 | 25,607 | ||
Total loans held-for-investment | Other | Rating 1 | |||||
Investments in loans | |||||
Total gross loans | 19,672 | 19,672 | 20,267 | ||
Total loans held-for-investment | Other | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 5,340 | ||||
Total loans held-for-investment | Other | N/A | |||||
Investments in loans | |||||
Total gross loans | 5,602 | 5,602 | |||
Total loans held-for-investment | Other | Total | |||||
Investments in loans | |||||
Total gross loans | 25,274 | 25,274 | 25,607 | ||
Loans held-for-sale | |||||
Investments in loans | |||||
Total gross loans | $ 1,326,837 | $ 1,326,837 | $ 745,743 | ||
Total gross loans (as a percent) | 13.40% | 13.40% | 10.10% | ||
Loans held-for-sale, residential | |||||
Investments in loans | |||||
Total gross loans | $ 626,719 | $ 626,719 | $ 613,287 | ||
Loans held-for-sale, commercial | |||||
Investments in loans | |||||
Total gross loans | 379,848 | 379,848 | 132,456 | ||
Loans transferred as secured borrowings | |||||
Investments in loans | |||||
Total gross loans | 74,281 | 74,281 | 74,403 | ||
Loans transferred as secured borrowings | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 74,281 | 74,281 | |||
Loans transferred as secured borrowings | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 74,403 | ||||
Loans transferred as secured borrowings | Total | |||||
Investments in loans | |||||
Total gross loans | $ 74,281 | $ 74,281 | $ 74,403 |
Loans - Activity in Portfolio (
Loans - Activity in Portfolio (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Activity in allowance for loan losses | ||||
Allowance for loan losses at the beginning of the period | $ 4,330 | $ 9,788 | ||
Provision for (reversal of) loan losses | (2,127) | (3,170) | ||
Provision for impaired loans | $ 0 | 29,853 | ||
Allowance for loan losses at the end of the period | 32,056 | $ 6,618 | 32,056 | 6,618 |
Recorded investment in loans related to the allowance for loan loss | 287,242 | 310,046 | 287,242 | 310,046 |
Activity in loan portfolio | ||||
Balance at the beginning of the period | 7,382,641 | 5,946,274 | ||
Acquisition of Infrastructure Lending Portfolio | 1,826,423 | |||
Acquisitions/origination/additional funding | 5,006,725 | 3,722,624 | ||
Capitalized Interest | 44,293 | 55,987 | ||
Basis of loans sold | (1,985,388) | (1,024,964) | ||
Loan maturities/principal repayments | (2,383,658) | (1,742,494) | ||
Discount accretion/premium amortization | 28,954 | 27,014 | ||
Changes in fair value | 3,940 | 19,485 | 26,573 | 45,484 |
Unrealized foreign currency translation gain | (17,095) | 31,395 | ||
Change in loan loss allowance, net | (27,726) | 3,170 | ||
Transfer to/from other asset classifications | 50 | 844 | ||
Balance at the end of the period | $ 9,901,792 | $ 7,065,334 | $ 9,901,792 | $ 7,065,334 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | |
Investment Securities | |||||||
Investment securities | $ 763,450 | $ 718,203 | |||||
Purchases | $ 291,874 | $ 61,798 | $ 312,339 | $ 69,231 | |||
Acquisition of Infrastructure Lending Portfolio | 65,060 | 65,060 | |||||
Sales | 5,209 | 6,016 | 11,134 | ||||
Principal collections | 34,070 | 123,644 | 355,757 | 209,903 | |||
VIE eliminations | |||||||
Investment Securities | |||||||
Purchases | (68,579) | (19,046) | (140,022) | (80,771) | |||
Sales | (18,902) | (1,469) | (26,849) | (11,657) | |||
Principal collections | (17,903) | (77,667) | |||||
Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 1,810,876 | $ 1,718,155 | |||||
Available-for-sale | One-month LIBOR | |||||||
Investment Securities | |||||||
Effective variable rate basis (as a percent) | 2.261% | 1.564% | |||||
Fair value option | |||||||
Investment Securities | |||||||
Fair Value | $ 1,100 | ||||||
Fair value option | VIE eliminations | |||||||
Investment Securities | |||||||
Investment securities | (1,047,426) | $ (999,952) | |||||
Held-to-maturity | |||||||
Investment Securities | |||||||
Purchases | 289,100 | 50,000 | 289,100 | 50,000 | |||
Acquisition of Infrastructure Lending Portfolio | 65,060 | 65,060 | |||||
Principal collections | 20,577 | 111,671 | 323,061 | 172,059 | |||
Held-to-maturity | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 473,896 | 433,468 | |||||
RMBS | |||||||
Investment Securities | |||||||
Portion of securities with variable rate | 194,400 | ||||||
RMBS | Available-for-sale | |||||||
Investment Securities | |||||||
Purchases | 7,433 | ||||||
Sales | 2,046 | 2,853 | |||||
Principal collections | 9,246 | 10,307 | 27,432 | 29,090 | |||
Purchase Amortized Cost | 176,952 | 199,029 | |||||
Credit OTTI | (9,897) | (9,897) | |||||
Recorded Amortized Cost | 167,055 | 189,132 | |||||
Non-Credit OTTI | (94) | ||||||
Gross Unrealized Gains | 60,812 | 58,011 | |||||
Gross Unrealized Losses | (28) | ||||||
Net Fair Value Adjustment | 60,812 | 57,889 | |||||
Fair Value | $ 227,867 | 247,021 | |||||
Portion of securities with variable rate | $ 207,000 | ||||||
Portion of securities with variable rate (as a percent) | 85.30% | 83.80% | |||||
Principal balance | $ 333,107 | $ 366,711 | |||||
Accretable yield | (50,877) | (55,712) | $ (55,712) | (56,938) | (55,712) | ||
Non-accretable difference | (109,114) | (121,867) | |||||
Total discount | (166,052) | (177,579) | |||||
Amortized cost | 167,055 | 189,132 | |||||
Credit deteriorated RMBS | 313,800 | 345,500 | |||||
Accretable yield related to credit deteriorated RMBS | $ 51,300 | $ 49,200 | |||||
Changes to accretable yield | |||||||
Balance at the beginning of the period | 50,877 | 55,712 | |||||
Accretion of discount | (2,526) | (7,967) | |||||
Sales | (352) | (530) | |||||
Transfer to/from non-accretable difference | 8,939 | 9,723 | |||||
Balance at the end of the period | 56,938 | 56,938 | 55,712 | ||||
Changes to non accretable difference | |||||||
Balance at the beginning of the period | 118,602 | 121,867 | |||||
Principal write-downs | (549) | (3,030) | |||||
Transfer to/from non-accretable difference | (8,939) | (9,723) | |||||
Balance at the end of the period | 109,114 | $ 109,114 | $ 121,867 | ||||
RMBS | Available-for-sale | LIBOR | |||||||
Investment Securities | |||||||
Variable rate, weighted average spread (as a percent) | 1.26% | 1.22% | |||||
RMBS | Available-for-sale | B- | |||||||
Investment Securities | |||||||
Weighted Average Coupon (as a percent) | 3.50% | 2.80% | |||||
WAL | 5 years 10 months 24 days | 6 years 4 months 24 days | |||||
RMBS | Available-for-sale | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 227,867 | $ 247,021 | |||||
RMBS | Fair value option | |||||||
Investment Securities | |||||||
Purchases | 45,095 | $ 45,095 | |||||
Principal collections | 119 | 119 | |||||
Portion of securities with variable rate | 0 | ||||||
RMBS | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 44,976 | ||||||
CMBS | Fair value option | |||||||
Investment Securities | |||||||
Purchases | 26,258 | 30,844 | 118,166 | 92,569 | |||
Sales | 22,065 | 1,469 | 30,012 | 22,791 | |||
Principal collections | $ 22,031 | $ 1,666 | $ 82,812 | $ 8,754 | |||
Portion of securities with variable rate | 23,500 | ||||||
CMBS | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 1,051,039 | 1,024,143 | |||||
Equity security | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 13,098 | $ 13,523 |
Investment Securities - AFS and
Investment Securities - AFS and Fair Value Option (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)security | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)security | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)security | |
Unrealized Losses | |||||
Third party interest | $ 247,147 | $ 7,519 | |||
RMBS | |||||
Unrealized Losses | |||||
Portion of securities with variable rate | $ 194,400 | 194,400 | |||
RMBS | Available-for-sale | |||||
Investment Securities | |||||
Cost of third party management | $ 400 | $ 500 | $ 1,300 | $ 1,400 | |
Estimated Fair Value | |||||
Securities with a loss less than 12 months | $ 10,321 | ||||
Securities with a loss greater than 12 months | 643 | ||||
Unrealized Losses | |||||
Securities with a loss less than 12 months | (99) | ||||
Securities with a loss greater than 12 months | $ (23) | ||||
Number of securities with unrealized loss position | security | 0 | 0 | 3 | ||
Portion of securities with variable rate | $ 207,000 | ||||
RMBS | Fair value option | |||||
Unrealized Losses | |||||
Fair value of investment securities before consolidation of VIEs | $ 45,000 | $ 45,000 | |||
Unpaid principal balance of investment securities before consolidation of VIEs | 27,500 | 27,500 | |||
Portion of securities with variable rate | 0 | 0 | |||
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 | 3,000,000 | 3,000,000 | |||
Portion of securities with variable rate | 23,500 | 23,500 | |||
VIE eliminations | |||||
Unrealized Losses | |||||
Fair value of investment securities before consolidation of VIEs eliminated against VIE liabilities | $ 48,600 | $ 48,600 |
Investment Securities - HTM (De
Investment Securities - HTM (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | $ 473,896 | $ 433,468 |
Gross Unrealized Holdings Gains | 2,582 | 2,649 |
Gross Unrealized Holdings Losses | (2,083) | (7,779) |
Fair Value | 474,395 | 428,338 |
HTM preferred equity interests | ||
Less than one year | 75,268 | |
One to three years | 321,641 | |
Three to five years | 28,257 | |
Thereafter | 48,730 | |
Total | 473,896 | 433,468 |
Preferred Equity Investment | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 408,836 | 413,110 |
Gross Unrealized Holdings Gains | 2,582 | 2,002 |
Gross Unrealized Holdings Losses | (2,083) | (7,779) |
Fair Value | 409,335 | 407,333 |
HTM preferred equity interests | ||
Total | 408,836 | 413,110 |
CMBS | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 408,836 | 20,358 |
Gross Unrealized Holdings Gains | 647 | |
Fair Value | 21,005 | |
HTM preferred equity interests | ||
Less than one year | 75,268 | |
One to three years | 305,311 | |
Three to five years | 28,257 | |
Total | 408,836 | $ 20,358 |
Infrastructure bonds | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 65,060 | |
Fair Value | 65,060 | |
HTM preferred equity interests | ||
One to three years | 16,330 | |
Thereafter | 48,730 | |
Total | $ 65,060 |
Investment Securities - SEREF (
Investment Securities - SEREF (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2012 | Dec. 31, 2017 | |
Residential Real Estate | |||
Equity Securities without Readily Determinable Fair Value, Amount | $ 25,685 | $ 31,015 | |
Ownership percentage | 2.00% | ||
SEREF | |||
Residential Real Estate | |||
Number of shares acquired | 9,140,000 | ||
Equity Securities without Readily Determinable Fair Value, Amount | $ 13,100 | $ 13,500 |
Properties (Details)
Properties (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 24 Months Ended | ||||||||
Dec. 31, 2017USD ($)item | Sep. 30, 2018USD ($)property | Sep. 30, 2018USD ($)item | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Mar. 31, 2018USD ($)propertyitem | Sep. 30, 2017USD ($)property | Sep. 30, 2018USD ($)ft²propertyitem | Sep. 30, 2017USD ($)property | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)ft²item | Dec. 31, 2015USD ($)ft²propertyitem | Dec. 31, 2016ft²item | |
Properties | |||||||||||||
Number of properties sold | property | 1 | 2 | 9 | 5 | |||||||||
Proceeds from sale of operating properties | $ 8,700 | $ 26,000 | $ 104,300 | $ 44,600 | |||||||||
Gain on sale of property | 1,400 | 11,200 | 25,100 | 16,400 | |||||||||
Summary of properties | |||||||||||||
Properties, cost | $ 2,755,050 | $ 3,058,135 | $ 3,058,135 | $ 3,058,135 | 3,058,135 | 3,058,135 | $ 2,755,050 | ||||||
Less: accumulated depreciation | (107,569) | (169,398) | (169,398) | (169,398) | (169,398) | (169,398) | (107,569) | ||||||
Properties, net | 2,647,481 | 2,888,737 | 2,888,737 | 2,888,737 | 2,888,737 | 2,888,737 | 2,647,481 | ||||||
Carrying value of real estate investment reclassified from held-for-investment to held-for-sale | 52,302 | 52,302 | 52,302 | 52,302 | 52,302 | ||||||||
Non-Controlling Interests | |||||||||||||
Properties | |||||||||||||
Gain on sale of property | 0 | $ 3,700 | |||||||||||
Master Lease Mortgages | Held-for-sale | |||||||||||||
Summary of properties | |||||||||||||
Number of properties reclassified from held-for-investment to held-for-sale | property | 1 | ||||||||||||
Carrying value of real estate investment reclassified from held-for-investment to held-for-sale | 31,900 | 31,900 | 31,900 | 31,900 | $ 31,900 | ||||||||
LNR | Held-for-sale | |||||||||||||
Summary of properties | |||||||||||||
Number of properties reclassified from held-for-investment to held-for-sale | property | 3 | ||||||||||||
Carrying value of real estate investment reclassified from held-for-investment to held-for-sale | 20,400 | 20,400 | 20,400 | 20,400 | $ 20,400 | ||||||||
Loss on held-for-sale | (1,500) | ||||||||||||
Property Segment | |||||||||||||
Summary of properties | |||||||||||||
Land and land improvements | 585,915 | 663,448 | 663,448 | 663,448 | 663,448 | 663,448 | 585,915 | ||||||
Buildings and building improvements | 1,838,266 | 2,059,383 | 2,059,383 | 2,059,383 | 2,059,383 | 2,059,383 | 1,838,266 | ||||||
Furniture & fixtures | 31,028 | 44,458 | 44,458 | 44,458 | 44,458 | $ 44,458 | 31,028 | ||||||
Property Segment | Minimum | |||||||||||||
Summary of properties | |||||||||||||
Land improvements, useful life | 0 years | ||||||||||||
Building and building improvements, useful life | 5 years | ||||||||||||
Furniture & fixtures, useful life | 3 years | ||||||||||||
Property Segment | Maximum | |||||||||||||
Summary of properties | |||||||||||||
Land improvements, useful life | 15 years | ||||||||||||
Building and building improvements, useful life | 45 years | ||||||||||||
Furniture & fixtures, useful life | 7 years | ||||||||||||
LNR | |||||||||||||
Properties | |||||||||||||
Number of properties in portfolio investment | property | 3 | ||||||||||||
Number of retail properties acquired | item | 22 | ||||||||||||
Number of equity interests in unconsolidated commercial real estate properties | property | 1 | ||||||||||||
Total gross properties and lease intangibles | 367,300 | 367,300 | 367,300 | 367,300 | $ 367,300 | ||||||||
Total liabilities assumed | 225,300 | 225,300 | 225,300 | 225,300 | 225,300 | ||||||||
Purchase price | 273,600 | $ 273,600 | $ 273,600 | ||||||||||
Gain on sale of property | 1,400 | 11,200 | 18,200 | 16,300 | |||||||||
Amount of non-controlling interest already held by a purchaser of a property | 300 | 300 | |||||||||||
Summary of properties | |||||||||||||
Land and land improvements | 86,711 | 82,332 | 82,332 | 82,332 | 82,332 | 82,332 | 86,711 | ||||||
Buildings and building improvements | 212,094 | 206,643 | 206,643 | 206,643 | 206,643 | 206,643 | 212,094 | ||||||
Furniture & fixtures | $ 1,036 | 1,871 | 1,871 | 1,871 | 1,871 | $ 1,871 | $ 1,036 | ||||||
LNR | Minimum | |||||||||||||
Summary of properties | |||||||||||||
Land improvements, useful life | 0 years | ||||||||||||
Building and building improvements, useful life | 3 years | ||||||||||||
Furniture & fixtures, useful life | 2 years | ||||||||||||
LNR | Maximum | |||||||||||||
Summary of properties | |||||||||||||
Land improvements, useful life | 15 years | ||||||||||||
Building and building improvements, useful life | 40 years | ||||||||||||
Furniture & fixtures, useful life | 5 years | ||||||||||||
LNR | Non-Controlling Interests | |||||||||||||
Properties | |||||||||||||
Gain on sale of property | 0 | $ 2,400 | $ 3,700 | $ 2,400 | |||||||||
Ireland Portfolio | |||||||||||||
Properties | |||||||||||||
Total gross properties and lease intangibles | 526,400 | ||||||||||||
Total liabilities assumed | $ 336,600 | ||||||||||||
Area of property | ft² | 600,000 | ||||||||||||
Woodstar Portfolio | |||||||||||||
Properties | |||||||||||||
Number of units acquired | item | 8,948 | ||||||||||||
Number of properties in portfolio investment | item | 32 | ||||||||||||
Total gross properties and lease intangibles | 622,200 | 622,200 | 622,200 | 622,200 | $ 622,200 | ||||||||
Total liabilities assumed | $ 407,700 | $ 407,700 | $ 407,700 | 407,700 | $ 407,700 | ||||||||
Number of acquired properties closed | item | 14 | 18 | 32 | ||||||||||
Woodstar II Portfolio | |||||||||||||
Properties | |||||||||||||
Number of units acquired | 1,740 | 6,109 | 312 | 4,057 | |||||||||
Number of properties in portfolio investment | 27 | 18 | 27 | ||||||||||
Number of units in portfolio investment | item | 6,109 | ||||||||||||
Percentage of occupied portfolio | 99.00% | ||||||||||||
Total gross properties and lease intangibles | $ 559,900 | $ 559,900 | $ 559,900 | 559,900 | $ 559,900 | ||||||||
Total liabilities assumed | 439,000 | 439,000 | 439,000 | 439,000 | 439,000 | ||||||||
Purchase price | $ 156,200 | 30,900 | $ 378,000 | ||||||||||
Number of acquired properties closed | 8 | 18 | |||||||||||
Medical Office Portfolio | |||||||||||||
Properties | |||||||||||||
Total gross properties and lease intangibles | 760,200 | 760,200 | 760,200 | 760,200 | 760,200 | ||||||||
Total liabilities assumed | 484,100 | 484,100 | 484,100 | 484,100 | $ 484,100 | ||||||||
Area of property | ft² | 1,900,000 | 1,900,000 | |||||||||||
Number of acquired properties closed | item | 34 | ||||||||||||
Master Lease Mortgages | |||||||||||||
Properties | |||||||||||||
Number of retail properties acquired | property | 17 | ||||||||||||
Total gross properties and lease intangibles | 505,000 | 505,000 | 505,000 | 505,000 | $ 505,000 | ||||||||
Total liabilities assumed | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | $ 262,100 | ||||||||
Number of industrial properties acquired | property | 3 | ||||||||||||
Term of master lease agreements | 24 years 7 months 6 days | ||||||||||||
Number of square feet of properties | ft² | 5,000,000 | ||||||||||||
Master Lease Mortgages | Disposed of by sale | |||||||||||||
Properties | |||||||||||||
Gain on sale of property | $ 6,900 | ||||||||||||
Net Leased Office Property | Ireland Portfolio | |||||||||||||
Properties | |||||||||||||
Number of properties in portfolio investment | property | 11 | ||||||||||||
Multifamily Property | Ireland Portfolio | |||||||||||||
Properties | |||||||||||||
Number of properties in portfolio investment | property | 1 | ||||||||||||
Utah, Florida, Texas and Minnesota | Master Lease Mortgages | Minimum | |||||||||||||
Properties | |||||||||||||
Concentration risk (as a percent) | 50.00% |
Investment in Unconsolidated _3
Investment in Unconsolidated Entities (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | $ 143,103 | $ 143,103 | $ 154,488 | |||
Cost method, Carrying value | 25,685 | 25,685 | 31,015 | |||
Investment in unconsolidated entities | 168,788 | 168,788 | $ 185,503 | |||
Earnings (loss) from unconsolidated entities | 2,625 | $ (4,689) | 6,633 | $ 27,763 | ||
Distributions of earnings from unconsolidated entities | 5,001 | $ 4,716 | ||||
Carrying value over (under) equity in net assets | $ 0 | $ 0 | ||||
Retail Fund | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 33.00% | 33.00% | 33.00% | |||
Equity method, Carrying value | $ 112,110 | $ 112,110 | $ 110,704 | |||
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 | $ 9,363 | $ 9,363 | $ 9,312 | |||
Equity interests in commercial real estate | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | |||
Equity method, Carrying value | $ 6,507 | $ 6,507 | $ 23,192 | |||
Cash proceeds | $ 16,700 | |||||
Equity interests in commercial real estate | Minimum | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | ||||
Equity interest in a residential mortgage originator | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | 8,996 | 8,996 | $ 7,742 | |||
Carrying value over (under) equity in net assets | 1,600 | 1,600 | ||||
Equity interest in a residential mortgage originator | Subordinated Loans | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | 2,000 | 2,000 | ||||
Various - Equity method | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | $ 6,127 | $ 6,127 | $ 3,538 | |||
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% | ||||
Equity interest in a servicing and advisory business | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 6.00% | 6.00% | 6.00% | |||
Equity method, Carrying value | $ 6,207 | $ 6,207 | $ 12,234 | |||
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 | ||||||
Investment in Unconsolidated Entities | ||||||
Cost method, Carrying value | $ 10,253 | $ 10,253 | $ 9,556 | |||
Various | Minimum | ||||||
Investment in Unconsolidated Entities | ||||||
Cost method, Ownership % | 0.00% | 0.00% | 0.00% | |||
Various | Maximum | ||||||
Investment in Unconsolidated Entities | ||||||
Cost method, Ownership % | 3.00% | 3.00% | 3.00% |
Goodwill and Intangibles (Detai
Goodwill and Intangibles (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Intangible Assets | ||
Goodwill | $ 256,425 | $ 140,437 |
Summary of Intangible Assets | ||
Gross carrying value | 257,621 | 255,806 |
Accumulated amortization | (103,673) | (72,714) |
Net carrying value | 153,948 | 183,092 |
In-place lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 198,814 | 187,816 |
Accumulated amortization | (94,761) | (65,351) |
Net carrying value | 104,053 | 122,465 |
Favorable lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 37,039 | 37,231 |
Accumulated amortization | (8,912) | (7,363) |
Net carrying value | 28,127 | 29,868 |
Domestic Servicing Rights | ||
Summary of Intangible Assets | ||
Gross carrying value | 21,768 | 30,759 |
Net carrying value | 21,768 | 30,759 |
Domestic Servicing Rights | Before consolidation of securitization VIEs | ||
Intangible Assets | ||
Servicing rights intangibles | 44,600 | 59,000 |
Domestic Servicing Rights | VIE eliminations | ||
Intangible Assets | ||
Servicing rights intangibles | 22,800 | 28,200 |
LNR | ||
Intangible Assets | ||
Goodwill | 140,400 | $ 140,400 |
Infrastructure Lending Segment | ||
Intangible Assets | ||
Goodwill | $ 116,000 | |
Period over which tax deductible goodwill is deducted | 15 years |
Goodwill and Intangibles - Acti
Goodwill and Intangibles - Activity (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Summary of activity within intangible assets | |
Balance as of beginning of period | $ 183,092 |
Amortization | (36,596) |
Sales | (1,994) |
Foreign exchange loss | 1,190 |
Impairment | (361) |
Changes in fair value due to changes in inputs and assumptions | (8,991) |
Transfers to properties held-for-sale | (833) |
Balance as of end of period | 153,948 |
Future amortization expense for the European servicing rights, in-place lease intangible assets and favorable lease intangible assets | |
2018 (remainder of) | 7,308 |
2,019 | 23,323 |
2,020 | 17,547 |
2,021 | 15,099 |
2,022 | 12,286 |
Thereafter | 56,617 |
Total | 132,180 |
Woodstar II Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 10,792 |
REIS Equity Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 10,029 |
In-place lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 122,465 |
Amortization | (33,458) |
Sales | (1,041) |
Foreign exchange loss | 936 |
Impairment | (361) |
Transfers to properties held-for-sale | (750) |
Balance as of end of period | 104,053 |
In-place lease | Woodstar II Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 10,792 |
In-place lease | REIS Equity Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 7,342 |
Favorable lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 29,868 |
Amortization | (3,138) |
Sales | (953) |
Foreign exchange loss | 254 |
Transfers to properties held-for-sale | (83) |
Balance as of end of period | 28,127 |
Favorable lease | REIS Equity Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 2,687 |
Domestic Servicing Rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 30,759 |
Changes in fair value due to changes in inputs and assumptions | (8,991) |
Balance as of end of period | $ 21,768 |
Secured Financing Agreements (D
Secured Financing Agreements (Details) $ in Thousands | Oct. 03, 2018USD ($) | Sep. 30, 2018USD ($)item | Aug. 31, 2018USD ($) | Jul. 31, 2018USD ($) | Jun. 30, 2018USD ($)item | Apr. 30, 2018USD ($)item | Feb. 28, 2018USD ($) | Sep. 30, 2018USD ($) | Mar. 31, 2018 | Sep. 30, 2018USD ($)loan | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Secured Financing Agreements | ||||||||||||
Principal Amount | $ 2,055,908 | $ 2,055,908 | $ 2,055,908 | $ 2,161,344 | ||||||||
Unamortized deferred financing costs | (8,690) | (8,690) | (8,690) | (8,269) | ||||||||
Carrying Value | 8,586,687 | 8,586,687 | 8,586,687 | 5,773,056 | ||||||||
Payment of debt | 3,880,450 | $ 2,724,179 | ||||||||||
Lender 2 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | 600,000 | 600,000 | 600,000 | |||||||||
Maximum facility size subject to certain conditions | 900,000 | $ 900,000 | 900,000 | 900,000 | ||||||||
Number of extension options | item | 3 | |||||||||||
Extended term / option | 1 year | |||||||||||
Lender 13 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | $ 200,000 | |||||||||||
Lender 13 Repo 1 Facility | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Lender 4 Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | 1,000,000 | $ 600,000 | 1,000,000 | 1,000,000 | ||||||||
Lender 12 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | $ 250,000 | |||||||||||
Floor interest rate (as a percent) | 0.25% | |||||||||||
Maturity period | 3 years | |||||||||||
Number of extension options | item | 3 | |||||||||||
Extended term / option | 1 year | |||||||||||
Lender 12 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.10% | |||||||||||
Lender 12 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.45% | |||||||||||
Lender 11 Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | $ 500,000 | $ 250,000 | $ 500,000 | 500,000 | ||||||||
Number of extension options | item | 4 | |||||||||||
Extended term / option | 1 year | |||||||||||
Lender 11 Repo 2 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | 2.00% | ||||||||||
Lender 11 Repo 2 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.75% | 2.75% | ||||||||||
Lender 7 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maturity period | 3 years | |||||||||||
Number of extension options | item | 2 | |||||||||||
Extended term / option | 1 year | |||||||||||
Lender 7 Secured Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum borrowing capacity | $ 300,000 | $ 300,000 | 300,000 | |||||||||
Maximum facility size subject to certain conditions | 650,000 | 650,000 | $ 650,000 | |||||||||
MBS Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Rolling maturity period | 11 months | |||||||||||
MBS Repo 3 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Rolling maturity period | 12 months | |||||||||||
MBS Repo 5 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | $ 150,000 | |||||||||||
Maturity period | 10 years | |||||||||||
Extended term / option | 6 months | |||||||||||
Investing and Servicing Segment Property Mortgages | Additional Mortgage Facilities Acquired | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum borrowing capacity | $ 34,800 | 34,800 | $ 34,800 | |||||||||
Number of mortgage facilities executed | loan | 2 | |||||||||||
Investing and Servicing Segment Property Mortgages | Additional Mortgage Facilities Acquired | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.62% | |||||||||||
Investing and Servicing Segment Property Mortgages | Additional Mortgage Facilities Acquired | Weighted-average | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maturity period | 3 years 8 months 12 days | |||||||||||
Woodstar I Government Financing | Additional Mortgage Facilities Acquired | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.06% | |||||||||||
Principal Amount | $ 27,000 | |||||||||||
Woodstar I Government Financing | Additional Mortgage Facilities Acquired | Weighted-average | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maturity period | 27 years 6 months | |||||||||||
Woodstar II Mortgages | Additional Mortgage Facilities Acquired | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.82% | |||||||||||
Principal Amount | $ 300,900 | |||||||||||
Maturity period | 10 years | |||||||||||
Infrastructure Lending Term Loan | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Increase in pricing margin every year (as a percent) | 0.25% | |||||||||||
Maximum Facility Size | $ 1,500,000 | 1,500,000 | $ 1,500,000 | |||||||||
Principal Amount | $ 1,500,000 | 1,500,000 | 1,500,000 | |||||||||
Maturity period | 3 years | |||||||||||
Extended term / option | 1 year | |||||||||||
Infrastructure Lending Term Loan | Subsequent event | ||||||||||||
Secured Financing Agreements | ||||||||||||
Payment of debt | $ 62,500 | |||||||||||
Infrastructure Lending Delayed Draw Term Loan | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Increase in pricing margin every year (as a percent) | 0.25% | |||||||||||
Maximum Facility Size | $ 334,000 | 334,000 | 334,000 | |||||||||
Maturity period | 3 years | |||||||||||
Extended term / option | 1 year | |||||||||||
Infrastructure Lending Revolving Secured Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Increase in pricing margin every year (as a percent) | 0.25% | |||||||||||
Maximum Facility Size | $ 286,900 | 286,900 | 286,900 | |||||||||
Principal Amount | $ 30,100 | 30,100 | 30,100 | |||||||||
Maturity period | 3 years | |||||||||||
Extended term / option | 1 year | |||||||||||
Secured financing agreements | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | $ 13,142,466 | 13,142,466 | 13,142,466 | |||||||||
Maximum Facility Size | 13,418,876 | 13,418,876 | 13,418,876 | |||||||||
Principal Amount | 8,671,698 | 8,671,698 | 8,671,698 | 5,813,447 | ||||||||
Unamortized premium (discount), net | 495 | 495 | 495 | 2,559 | ||||||||
Unamortized deferred financing costs | (85,506) | (85,506) | (85,506) | (42,950) | ||||||||
Secured financing agreements | Lender 1 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 1,703,978 | 1,703,978 | 1,703,978 | |||||||||
Maximum Facility Size | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||
Principal Amount | 1,303,966 | 1,303,966 | $ 1,303,966 | 1,137,654 | ||||||||
Secured financing agreements | Lender 1 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.60% | |||||||||||
Secured financing agreements | Lender 1 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 5.75% | |||||||||||
Secured financing agreements | Lender 2 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 322,291 | 322,291 | $ 322,291 | |||||||||
Maximum Facility Size | 900,000 | 900,000 | 900,000 | |||||||||
Principal Amount | 243,100 | 243,100 | $ 243,100 | 238,428 | ||||||||
Secured financing agreements | Lender 2 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Secured financing agreements | Lender 2 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.35% | |||||||||||
Secured financing agreements | Lender 3 Repo I | ||||||||||||
Secured Financing Agreements | ||||||||||||
Principal Amount | 75,291 | |||||||||||
Secured financing agreements | Lender 13 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 18,407 | 18,407 | $ 18,407 | |||||||||
Maximum Facility Size | 200,000 | 200,000 | 200,000 | |||||||||
Principal Amount | 14,824 | 14,824 | $ 14,824 | |||||||||
Secured financing agreements | Lender 13 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Secured financing agreements | Lender 4 Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 964,155 | 964,155 | $ 964,155 | |||||||||
Maximum Facility Size | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||
Principal Amount | 401,592 | 401,592 | $ 401,592 | 215,372 | ||||||||
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) | 3.25% | |||||||||||
Secured financing agreements | Lender 6 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 654,464 | 654,464 | $ 654,464 | |||||||||
Maximum Facility Size | 600,000 | 600,000 | 600,000 | |||||||||
Principal Amount | 507,545 | 507,545 | $ 507,545 | 494,353 | ||||||||
Secured financing agreements | Lender 6 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.00% | |||||||||||
Secured financing agreements | Lender 6 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||||
Secured financing agreements | Lender 6 Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 515,755 | 515,755 | $ 515,755 | |||||||||
Maximum Facility Size | 431,056 | 431,056 | 431,056 | |||||||||
Principal Amount | 403,685 | 403,685 | $ 403,685 | 332,815 | ||||||||
Secured financing agreements | Lender 6 Repo 2 Facility | EURIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | Lender 6 Repo 2 Facility | GBP LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||||
Secured financing agreements | Lender 9 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Principal Amount | 65,762 | |||||||||||
Secured financing agreements | Lender 10 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 200,425 | 200,425 | $ 200,425 | |||||||||
Maximum Facility Size | 164,840 | 164,840 | 164,840 | |||||||||
Principal Amount | 160,480 | 160,480 | $ 160,480 | 77,800 | ||||||||
Secured financing agreements | Lender 10 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.50% | |||||||||||
Secured financing agreements | Lender 10 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||||
Secured financing agreements | Lender 11 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | 200,000 | 200,000 | $ 200,000 | |||||||||
Secured financing agreements | Lender 11 Repo 1 Facility | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||||
Secured financing agreements | Lender 12 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 57,322 | 57,322 | $ 57,322 | |||||||||
Maximum Facility Size | 250,000 | 250,000 | 250,000 | |||||||||
Principal Amount | 43,500 | 43,500 | $ 43,500 | |||||||||
Secured financing agreements | Lender 12 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.10% | |||||||||||
Secured financing agreements | Lender 12 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.45% | |||||||||||
Secured financing agreements | Lender 11 Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 355,451 | 355,451 | $ 355,451 | |||||||||
Maximum Facility Size | 500,000 | 500,000 | 500,000 | |||||||||
Principal Amount | 270,690 | 270,690 | $ 270,690 | |||||||||
Secured financing agreements | Lender 11 Repo 2 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.00% | |||||||||||
Secured financing agreements | Lender 11 Repo 2 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.75% | |||||||||||
Secured financing agreements | Lender 7 Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | 250,000 | 250,000 | $ 250,000 | |||||||||
Secured financing agreements | Lender 7 Repo 1 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.75% | |||||||||||
Secured financing agreements | Lender 7 Repo 1 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | Lender 7 Secured Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 353,449 | 353,449 | $ 353,449 | |||||||||
Maximum Facility Size | 650,000 | 650,000 | 650,000 | |||||||||
Principal Amount | 159,453 | 159,453 | $ 159,453 | |||||||||
Secured financing agreements | Lender 7 Secured Financing | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | Lender 8 Secured Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Principal Amount | 15,617 | |||||||||||
Secured financing agreements | Lender 8 Secured Financing | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 4.00% | |||||||||||
Secured financing agreements | Conduit Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 122,728 | 122,728 | $ 122,728 | |||||||||
Maximum Facility Size | 200,000 | 200,000 | 200,000 | |||||||||
Principal Amount | 94,600 | 94,600 | $ 94,600 | 40,075 | ||||||||
Secured financing agreements | Conduit Repo 2 Facility | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | Conduit Repo 3 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 125,108 | 125,108 | $ 125,108 | |||||||||
Maximum Facility Size | 150,000 | 150,000 | 150,000 | |||||||||
Principal Amount | 94,508 | 94,508 | $ 94,508 | 26,895 | ||||||||
Secured financing agreements | Conduit Repo 3 Facility | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.10% | |||||||||||
Secured financing agreements | MBS Repo 1 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Principal Amount | 6,510 | |||||||||||
Secured financing agreements | MBS Repo 2 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 100,526 | 100,526 | $ 100,526 | |||||||||
Maximum Facility Size | 69,777 | 69,777 | 69,777 | |||||||||
Principal Amount | 69,777 | 69,777 | $ 69,777 | 222,672 | ||||||||
Secured financing agreements | MBS Repo 2 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.65% | |||||||||||
Secured financing agreements | MBS Repo 2 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | MBS Repo 3 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 752,458 | 752,458 | $ 752,458 | |||||||||
Maximum Facility Size | 365,812 | 365,812 | 365,812 | |||||||||
Principal Amount | 365,812 | 365,812 | $ 365,812 | 224,150 | ||||||||
Secured financing agreements | MBS Repo 3 Facility | Minimum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.32% | |||||||||||
Secured financing agreements | MBS Repo 3 Facility | Maximum | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.85% | |||||||||||
Secured financing agreements | MBS Repo 4 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 163,558 | 163,558 | $ 163,558 | |||||||||
Maximum Facility Size | 110,000 | 110,000 | 110,000 | |||||||||
Principal Amount | $ 25,000 | $ 25,000 | $ 25,000 | 77,318 | ||||||||
Current maturity period, relative to when the buyer delivers notice to the seller | 270 days | |||||||||||
Secured financing agreements | MBS Repo 4 Facility | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.70% | |||||||||||
Secured financing agreements | MBS Repo 5 Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 4.14% | 4.14% | 4.14% | |||||||||
Pledged Asset Carrying Value | $ 25,585 | $ 25,585 | $ 25,585 | |||||||||
Maximum Facility Size | 150,000 | 150,000 | 150,000 | |||||||||
Principal Amount | 24,721 | 24,721 | 24,721 | |||||||||
Secured financing agreements | Master Lease Mortgages | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 459,504 | 459,504 | 459,504 | |||||||||
Maximum Facility Size | 265,900 | 265,900 | 265,900 | |||||||||
Principal Amount | $ 265,900 | $ 265,900 | $ 265,900 | 265,900 | ||||||||
Secured financing agreements | Master Lease Mortgages | Minimum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 4.36% | 4.36% | 4.36% | |||||||||
Secured financing agreements | Master Lease Mortgages | Maximum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 4.38% | 4.38% | 4.38% | |||||||||
Secured financing agreements | Investing and Servicing Segment Property Mortgages | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | $ 244,184 | $ 244,184 | $ 244,184 | |||||||||
Maximum Facility Size | 218,019 | 218,019 | 218,019 | |||||||||
Principal Amount | 203,165 | 203,165 | 203,165 | 177,411 | ||||||||
Secured financing agreements | Ireland Mortgage | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 468,926 | 468,926 | 468,926 | |||||||||
Maximum Facility Size | 338,525 | 338,525 | 338,525 | |||||||||
Principal Amount | 338,525 | 338,525 | $ 338,525 | 349,900 | ||||||||
Secured financing agreements | Ireland Mortgage | EURIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 1.69% | |||||||||||
Secured financing agreements | Woodstar I Mortgages | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 361,415 | 361,415 | $ 361,415 | |||||||||
Maximum Facility Size | 276,748 | 276,748 | 276,748 | |||||||||
Principal Amount | $ 276,748 | $ 276,748 | $ 276,748 | 276,748 | ||||||||
Secured financing agreements | Woodstar I Mortgages | Minimum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.72% | 3.72% | 3.72% | |||||||||
Secured financing agreements | Woodstar I Mortgages | Maximum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.97% | 3.97% | 3.97% | |||||||||
Secured financing agreements | Woodstar I Government Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | $ 302,061 | $ 302,061 | $ 302,061 | |||||||||
Maximum Facility Size | 131,746 | 131,746 | 131,746 | |||||||||
Principal Amount | $ 131,746 | $ 131,746 | $ 131,746 | 133,418 | ||||||||
Secured financing agreements | Woodstar I Government Financing | Minimum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 1.00% | 1.00% | 1.00% | |||||||||
Secured financing agreements | Woodstar I Government Financing | Maximum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | |||||||||
Secured financing agreements | Woodstar II Mortgages | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | $ 505,079 | $ 505,079 | $ 505,079 | |||||||||
Maximum Facility Size | 417,669 | 417,669 | 417,669 | |||||||||
Principal Amount | $ 417,669 | $ 417,669 | $ 417,669 | 116,745 | ||||||||
Secured financing agreements | Woodstar II Mortgages | Minimum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.81% | 3.81% | 3.81% | |||||||||
Secured financing agreements | Woodstar II Mortgages | Maximum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.85% | 3.85% | 3.85% | |||||||||
Secured financing agreements | Woodstar II Government Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | $ 161,987 | $ 161,987 | $ 161,987 | |||||||||
Maximum Facility Size | 27,018 | 27,018 | 27,018 | |||||||||
Principal Amount | $ 27,018 | $ 27,018 | $ 27,018 | |||||||||
Secured financing agreements | Woodstar II Government Financing | Minimum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 1.00% | 1.00% | 1.00% | |||||||||
Secured financing agreements | Woodstar II Government Financing | Maximum | ||||||||||||
Secured Financing Agreements | ||||||||||||
Interest rate (as a percent) | 3.19% | 3.19% | 3.19% | |||||||||
Secured financing agreements | Medical Office Mortgages | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | $ 687,921 | $ 687,921 | $ 687,921 | |||||||||
Maximum Facility Size | 524,499 | 524,499 | 524,499 | |||||||||
Principal Amount | 491,197 | 491,197 | $ 491,197 | 497,613 | ||||||||
Secured financing agreements | Medical Office Mortgages | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.50% | |||||||||||
Secured financing agreements | Term Loan A | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 918,342 | 918,342 | $ 918,342 | |||||||||
Maximum Facility Size | 300,000 | 300,000 | 300,000 | |||||||||
Principal Amount | 300,000 | 300,000 | $ 300,000 | 300,000 | ||||||||
Secured financing agreements | Term Loan A | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | Revolving Secured Financing | ||||||||||||
Secured Financing Agreements | ||||||||||||
Maximum Facility Size | 100,000 | 100,000 | $ 100,000 | |||||||||
Secured financing agreements | Revolving Secured Financing | LIBOR | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pricing margin (as a percent) | 2.25% | |||||||||||
Secured financing agreements | FHLB | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 719,781 | 719,781 | $ 719,781 | |||||||||
Maximum Facility Size | 500,000 | 500,000 | 500,000 | |||||||||
Principal Amount | 500,000 | 500,000 | 500,000 | $ 445,000 | ||||||||
Secured financing agreements | Infrastructure Lending Facility | ||||||||||||
Secured Financing Agreements | ||||||||||||
Pledged Asset Carrying Value | 1,877,606 | 1,877,606 | 1,877,606 | |||||||||
Maximum Facility Size | 2,127,267 | 2,127,267 | 2,127,267 | |||||||||
Principal Amount | $ 1,536,477 | $ 1,536,477 | $ 1,536,477 |
Secured Financing Agreements -
Secured Financing Agreements - Principal Repayments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Repayment of secured financings | |||||
Total | $ 2,055,908 | $ 2,055,908 | $ 2,161,344 | ||
Secured financing agreements | |||||
Repayment of secured financings | |||||
2018 (remainder of) | 228,135 | 228,135 | |||
2,019 | 755,668 | 755,668 | |||
2,020 | 1,244,235 | 1,244,235 | |||
2,021 | 1,712,807 | 1,712,807 | |||
2,022 | 1,786,663 | 1,786,663 | |||
Thereafter | 2,944,190 | 2,944,190 | |||
Total | 8,671,698 | 8,671,698 | $ 5,813,447 | ||
Amortization of deferred financing costs from secured financing agreements included in interest expense | 6,600 | $ 5,000 | 17,500 | $ 14,400 | |
Repurchase Agreements | |||||
Repayment of secured financings | |||||
2018 (remainder of) | 197,287 | 197,287 | |||
2,019 | 464,418 | 464,418 | |||
2,020 | 594,641 | 594,641 | |||
2,021 | 872,114 | 872,114 | |||
2,022 | 804,939 | 804,939 | |||
Thereafter | 1,090,401 | 1,090,401 | |||
Total | 4,023,800 | 4,023,800 | |||
Other Secured Financing | |||||
Repayment of secured financings | |||||
2018 (remainder of) | 30,848 | 30,848 | |||
2,019 | 291,250 | 291,250 | |||
2,020 | 649,594 | 649,594 | |||
2,021 | 840,693 | 840,693 | |||
2,022 | 981,724 | 981,724 | |||
Thereafter | 1,853,789 | 1,853,789 | |||
Total | $ 4,647,898 | $ 4,647,898 |
Secured Financing Agreements _2
Secured Financing Agreements - Repurchase Agreements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Secured Financing Agreements | ||
Long-term Debt, Gross | $ 2,055,908 | $ 2,161,344 |
Secured financing agreements | ||
Secured Financing Agreements | ||
Long-term Debt, Gross | 8,671,698 | 5,813,447 |
Repurchase Agreements | ||
Secured Financing Agreements | ||
Outstanding balance | 4,023,800 | 3,235,095 |
Long-term Debt, Gross | $ 4,023,800 | |
Percentage of repurchase agreements for which margin calls are limited to collateral specific credit marks | 74.00% | |
Percentage of repurchase agreements containing margin call provisions that pertain to loans held-for-sale | 28.00% | |
Repurchase Agreements | Loans held for investment | ||
Secured Financing Agreements | ||
Outstanding balance | $ 3,349,382 | 2,637,475 |
Repurchase Agreements | Loans held-for-sale | ||
Secured Financing Agreements | ||
Outstanding balance | 189,108 | 66,970 |
Repurchase Agreements | Investment securities. | ||
Secured Financing Agreements | ||
Outstanding balance | $ 485,310 | $ 530,650 |
Unsecured Secured Notes (Detail
Unsecured Secured Notes (Details) $ / shares in Units, shares in Thousands | Oct. 01, 2018USD ($)shares | Jan. 29, 2018USD ($) | Mar. 29, 2017USD ($) | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($) |
Unsecured Senior Notes | ||||||||
Principal Amount | $ 2,055,908,000 | $ 2,055,908,000 | $ 2,161,344,000 | |||||
Conversion Spread Value - Shares | shares | 542 | 2,313 | 559 | 2,284 | ||||
Unamortized deferred financing costs | $ (8,690,000) | $ (8,690,000) | (8,269,000) | |||||
Carrying amount of debt components | 2,024,570,000 | 2,024,570,000 | 2,125,235,000 | |||||
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes | 3,755,000 | 3,755,000 | 31,638,000 | |||||
Principal amount of notes, basis for conversion | 1,000 | 1,000 | ||||||
Interest expense | $ 102,658,000 | $ 76,431,000 | $ 281,433,000 | $ 213,608,000 | ||||
Closing share price (in dollars per share) | $ / shares | $ 21.52 | $ 21.72 | $ 21.52 | $ 21.72 | ||||
Loss on extinguishment of debt | $ 2,540,000 | $ 2,726,000 | $ 5,916,000 | |||||
2018 Notes | ||||||||
Unsecured Senior Notes | ||||||||
Principal Amount | $ 369,981,000 | |||||||
Coupon Rate (as a percent) | 4.55% | |||||||
Conversion Spread Value - Shares | shares | 742 | 733 | ||||||
2019 Notes | ||||||||
Unsecured Senior Notes | ||||||||
Principal Amount | $ 105,908,000 | $ 105,908,000 | $ 341,363,000 | |||||
Coupon Rate (as a percent) | 4.00% | 4.00% | ||||||
Effective Rate (as a percent) | 5.74% | 5.74% | ||||||
Remaining Period of Amortization | 3 months 18 days | |||||||
Conversion Rate | 51.7349 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 19.33 | $ 19.33 | ||||||
Conversion Spread Value - Shares | shares | 542 | 1,571 | 559 | 1,551 | ||||
Amount issued | $ 263,400,000 | $ 263,400,000 | ||||||
Amount by which if-converted value of the Notes exceed principal amount | $ 12,000,000 | |||||||
Closing share price (in dollars per share) | $ / shares | $ 21.52 | $ 21.52 | ||||||
Settlement consideration attributable to the liability component | $ 236,200,000 | |||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | $ (29,800,000) | |||||||
Fair value of shares issued | 245,200,000 | |||||||
Loss on extinguishment of debt | 1,800,000 | |||||||
Debt conversion original amount | $ 266,000,000 | |||||||
Shares issued to settle redemption | shares | 11,200 | |||||||
Value of shares issued to settle redemption | $ 235,500,000 | |||||||
Cash payments to settle redemptions | 20,800,000 | |||||||
If-converted value | 117,900,000 | 117,900,000 | ||||||
2019 Notes | Subsequent event | ||||||||
Unsecured Senior Notes | ||||||||
Shares issued to settle redemption | shares | 1,200 | |||||||
Value of shares issued to settle redemption | $ 27,900,000 | |||||||
Cash payments to settle redemptions | $ 4,700,000 | |||||||
2021 Senior Notes 3.625% | ||||||||
Unsecured Senior Notes | ||||||||
Principal Amount | $ 500,000,000 | $ 500,000,000 | ||||||
Coupon Rate (as a percent) | 3.625% | 3.63% | 3.63% | |||||
Effective Rate (as a percent) | 3.89% | 3.89% | ||||||
Remaining Period of Amortization | 2 years 3 months 18 days | |||||||
Amount issued | $ 500,000,000 | |||||||
2021 Senior Notes 3.625% | Maximum | ||||||||
Unsecured Senior Notes | ||||||||
Percentage of principal amount that may be redeemed | 40.00% | |||||||
2021 Senior Notes 3.625% | Debt instrument redemption period one | ||||||||
Unsecured Senior Notes | ||||||||
Percentage of principal amount that may be redeemed | 100.00% | |||||||
2021 Senior Notes 3.625% | Debt instrument redemption period two | ||||||||
Unsecured Senior Notes | ||||||||
Percentage of principal amount that may be redeemed | 100.00% | |||||||
2021 Senior Notes 5.00% | ||||||||
Unsecured Senior Notes | ||||||||
Principal Amount | $ 700,000,000 | $ 700,000,000 | 700,000,000 | |||||
Coupon Rate (as a percent) | 5.00% | 5.00% | ||||||
Effective Rate (as a percent) | 5.32% | 5.32% | ||||||
Remaining Period of Amortization | 3 years 2 months 12 days | |||||||
2023 Notes | ||||||||
Unsecured Senior Notes | ||||||||
Principal Amount | $ 250,000,000 | $ 250,000,000 | 250,000,000 | |||||
Coupon Rate (as a percent) | 4.375% | 4.38% | 4.38% | |||||
Effective Rate (as a percent) | 4.86% | 4.86% | ||||||
Remaining Period of Amortization | 4 years 6 months | |||||||
Conversion Rate | 38.5959 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 25.91 | $ 25.91 | ||||||
Amount issued | $ 250,000,000 | |||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 42,400,000 | |||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | $ 3,755,000 | |||||||
If-converted value | $ 207,600,000 | 207,600,000 | ||||||
2025 Senior Notes | ||||||||
Unsecured Senior Notes | ||||||||
Principal Amount | $ 500,000,000 | $ 500,000,000 | 500,000,000 | |||||
Coupon Rate (as a percent) | 4.75% | 4.75% | ||||||
Effective Rate (as a percent) | 5.04% | 5.04% | ||||||
Remaining Period of Amortization | 6 years 6 months | |||||||
Convertible Senior Notes | ||||||||
Unsecured Senior Notes | ||||||||
Unamortized discount | $ (5,194,000) | $ (5,194,000) | (11,186,000) | |||||
Interest expense | 21,102,000 | |||||||
Debt repurchased amount | 250,700,000 | 0 | 0 | |||||
Loss on extinguishment of debt | 1,810,000 | |||||||
Convertible Senior Notes | 2018 Notes | ||||||||
Unsecured Senior Notes | ||||||||
Interest expense | 5,900,000 | $ 19,300,000 | 24,800,000 | 58,000,000 | ||||
Amount of debt repurchased | 230,000,000 | |||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | $ 18,100,000 | |||||||
Loss on extinguishment of debt | $ 5,900,000 | |||||||
Senior Notes | ||||||||
Unsecured Senior Notes | ||||||||
Unamortized discount | $ (17,454,000) | $ (17,454,000) | $ (16,654,000) |
Loan Securitization_Sale Acti_3
Loan Securitization/Sale Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Loan Transfers Accounted for as Secured Borrowings | ||||
Net gains (losses) on the sale of loan qualifying for sales treatment | $ 2,400 | $ 2,400 | ||
LNR | ||||
Loan Transfer Activities | ||||
Face Amount | 360,651 | $ 498,022 | 825,610 | $ 938,879 |
Proceeds | 372,300 | 517,351 | 854,065 | 987,828 |
Repayment of purchase agreements | 272,156 | 376,687 | 623,538 | 709,666 |
Real Estate Investment Lending | ||||
Loan Transfers Accounted for as Secured Borrowings | ||||
Face Amount | 75,000 | 75,000 | ||
Proceeds | $ 74,200 | 74,200 | ||
Real Estate Investment Lending | Loans held-for-sale, commercial | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 550,000 | 746,400 | 38,750 | |
Proceeds | 547,776 | 742,496 | $ 37,079 | |
Real Estate Investment Lending | Loans held-for-sale, residential | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 374,071 | 374,071 | ||
Proceeds | $ 389,044 | $ 389,044 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activity - Designated and Non-Designated Hedges (Details) - Sep. 30, 2018 € in Thousands, £ in Thousands, $ in Thousands | instrument | item | GBP (£) | EUR (€) | USD ($) |
Derivatives | |||||
Number of contracts | 312 | ||||
Foreign exchange contracts | EUR | Long | |||||
Derivatives | |||||
Number of contracts | 1 | ||||
Aggregate notional amount | $ | $ 2,166 | ||||
Foreign exchange contracts | EUR | Short | |||||
Derivatives | |||||
Number of contracts | 56 | ||||
Aggregate notional amount | € | € 292,826 | ||||
Foreign exchange contracts | CAD | Long | |||||
Derivatives | |||||
Number of contracts | 1 | ||||
Aggregate notional amount | $ | 1,103 | ||||
Foreign exchange contracts | CAD | Short | |||||
Derivatives | |||||
Number of contracts | 16 | ||||
Aggregate notional amount | $ | 9,055 | ||||
Foreign exchange contracts | AUD | Long | |||||
Derivatives | |||||
Number of contracts | 1 | ||||
Aggregate notional amount | $ | 1,064 | ||||
Foreign exchange contracts | AUD | Short | |||||
Derivatives | |||||
Number of contracts | 4 | ||||
Aggregate notional amount | $ | 8,122 | ||||
Foreign exchange contracts | GBP | Long | |||||
Derivatives | |||||
Number of contracts | 3 | ||||
Aggregate notional amount | £ | £ 7,589 | ||||
Foreign exchange contracts | GBP | Short | |||||
Derivatives | |||||
Number of contracts | 148 | ||||
Aggregate notional amount | £ | £ 250,899 | ||||
Interest rate contracts | Derivatives designated as hedging instruments | |||||
Derivatives | |||||
Number of contracts | 13 | 1 | |||
Interest rate swaps - Paying fixed rates | USD | |||||
Derivatives | |||||
Number of contracts | 45 | ||||
Aggregate notional amount | $ | 1,238,520 | ||||
Interest rate swaps - Receiving fixed rates | USD | |||||
Derivatives | |||||
Number of contracts | 2 | ||||
Aggregate notional amount | $ | 970,000 | ||||
Interest Rate Swap Guarantees | CAD | |||||
Derivatives | |||||
Number of contracts | 1 | ||||
Aggregate notional amount | $ | 92,699 | ||||
Interest Rate Swap Guarantees | GBP | |||||
Derivatives | |||||
Number of contracts | 1 | ||||
Aggregate notional amount | $ | 11,930 | ||||
Interest Rate Swap Guarantees | USD | |||||
Derivatives | |||||
Number of contracts | 11 | ||||
Aggregate notional amount | $ | 730,356 | ||||
Interest rate caps | EUR | |||||
Derivatives | |||||
Number of contracts | 2 | ||||
Aggregate notional amount | € | € 294,000 | ||||
Interest rate caps | USD | |||||
Derivatives | |||||
Number of contracts | 10 | ||||
Aggregate notional amount | $ | 126,979 | ||||
Interest Rate Swaption | Derivatives designated as hedging instruments | |||||
Derivatives | |||||
Number of contracts | 2 | ||||
Credit spread instrument | USD | |||||
Derivatives | |||||
Number of contracts | 9 | ||||
Aggregate notional amount | $ | 74,000 | ||||
Forward loan purchase commitments | USD | |||||
Derivatives | |||||
Number of contracts | 1 | ||||
Aggregate notional amount | $ | $ 25,000 |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activity - Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 59,807 | $ 33,898 |
Fair Value of Derivatives in a Liability Position | 35,386 | 36,200 |
Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 1 | 25 |
Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 59,806 | 33,873 |
Fair Value of Derivatives in a Liability Position | 35,386 | 36,200 |
Interest rate contracts | Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 1 | 25 |
Interest rate contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 52,760 | 27,234 |
Fair Value of Derivatives in a Liability Position | 29,560 | 2,781 |
Interest Rate Swap Guarantees | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in a Liability Position | 282 | |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 7,046 | 6,400 |
Fair Value of Derivatives in a Liability Position | 5,390 | 33,419 |
Credit spread instrument | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 239 | |
Fair Value of Derivatives in a Liability Position | $ 154 |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activity - Effect on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | $ 11,735 | $ (24,224) | $ 27,498 | $ (66,159) |
Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 11,735 | (24,224) | 27,498 | (66,159) |
Interest rate contracts | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 4,444 | (3,836) | 10,553 | (10,190) |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 8,073 | (19,650) | 17,748 | (54,814) |
Credit spread instrument | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | (782) | (738) | (803) | (1,155) |
Cash flow hedges | Interest rate contracts | Derivatives designated as hedging instruments | ||||
Derivatives | ||||
Gain (Loss) Recognized in OCI (effective portion) | (3) | 8 | 45 | |
Gain (Loss) Reclassified from AOCI into Income (effective portion) | $ 6 | $ 19 | $ 32 | $ (11) |
Offsetting Assets and Liabili_3
Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Net Amounts of Assets Presented in the Statement of Financial Position | $ 59,807 | $ 33,898 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 4,059,186 | 3,271,295 |
Net Amounts of Liabilities Presented in the Statement of Financial | 4,059,186 | 3,271,295 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 4,028,187 | 3,241,618 |
Cash Collateral Pledged | 30,185 | 15,333 |
Net Amount | 814 | 14,344 |
Derivatives | ||
Assets | ||
Gross Amounts of Recognized Assets | 59,807 | 33,898 |
Net Amounts of Assets Presented in the Statement of Financial Position | 59,807 | 33,898 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 4,387 | 6,523 |
Net Amount | 55,420 | 27,375 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 35,386 | 36,200 |
Net Amounts of Liabilities Presented in the Statement of Financial | 35,386 | 36,200 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 4,387 | 6,523 |
Cash Collateral Pledged | 30,185 | 15,333 |
Net Amount | 814 | 14,344 |
Repurchase agreements | ||
Liabilities | ||
Gross Amounts of Recognized Liabilities | 4,023,800 | 3,235,095 |
Net Amounts of Liabilities Presented in the Statement of Financial | 4,023,800 | 3,235,095 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 4,023,800 | $ 3,235,095 |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Thousands | Sep. 30, 2018USD ($)item | Dec. 31, 2017USD ($) |
Variable interest entities | ||
VIE Assets | $ 48,034,610 | $ 51,045,874 |
VIE Liabilities | 46,945,674 | 50,000,010 |
Investment securities | 763,450 | 718,203 |
Debt obligations to beneficial interest holders, unpaid principal balances | 2,055,908 | 2,161,344 |
Interest in VIE | 168,788 | $ 185,503 |
Primary beneficiary | Accounting Standards Update 2015-02 | ||
Variable interest entities | ||
VIE Assets | 801,300 | |
VIE Liabilities | 531,400 | |
Primary beneficiary | SPT Dolphin | Accounting Standards Update 2015-02 | ||
Variable interest entities | ||
VIE assets | 693,600 | |
VIE liabilities | $ 447,300 | |
Not primary beneficiary | ||
Variable interest entities | ||
Number of CDO structures currently in default | item | 2 | |
Maximum risk of loss related to VIEs, on fair value basis | $ 48,600 | |
Not primary beneficiary | Accounting Standards Update 2015-02 | Measurement Period Adjustments | ||
Variable interest entities | ||
Interest in VIE | 130,300 | |
Not primary beneficiary | Securitization SPEs | ||
Variable interest entities | ||
Debt obligations to beneficial interest holders, unpaid principal balances | $ 9,800,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Jun. 30, 2018USD ($) | Apr. 30, 2018shares | Mar. 31, 2018USD ($) | Jan. 31, 2018USD ($)item | Mar. 31, 2017shares | Jan. 31, 2016USD ($) | May 31, 2015shares | Dec. 31, 2013USD ($)item | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($)shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Related-Party Transactions | |||||||||||||||
Granted (in shares) | shares | 1,563,608 | ||||||||||||||
Acquisitions and originations of mortgage financing | $ 5,006,725 | $ 3,722,624 | |||||||||||||
Spread on interest rate basis (as a percent) | 4.40% | 4.40% | |||||||||||||
Starwood Property Trust, Inc. Manager Equity Plan | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Granted (in shares) | shares | 775,000 | ||||||||||||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Granted (in shares) | shares | 775,000 | 1,000,000 | 675,000 | ||||||||||||
Award vesting period | 3 years | 3 years | 3 years | ||||||||||||
Manager | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Base management fee incurred | $ 18,400 | $ 16,900 | $ 53,900 | 50,700 | |||||||||||
Base management fee payable | 18,400 | 18,400 | $ 17,100 | ||||||||||||
Incentive fee incurred | 4,300 | 10,400 | 19,600 | 20,200 | |||||||||||
Incentive fees payable | 4,300 | 4,300 | 22,000 | ||||||||||||
Executive compensation and other reimbursable expenses | 1,900 | $ 1,700 | 5,900 | $ 4,500 | |||||||||||
Executive compensation and other reimbursable expense payable | $ 2,600 | $ 2,600 | 3,300 | ||||||||||||
Manager | Restricted stock units | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Granted (in shares) | shares | 0 | 0 | 189,813 | 138,264 | |||||||||||
Grant date fair value | $ 4,000 | $ 3,100 | |||||||||||||
Award vesting period | 3 years | 3 years | |||||||||||||
Share-based compensation expense | $ 800 | $ 700 | $ 2,100 | ||||||||||||
Manager | Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Share-based compensation expense | 3,200 | $ 3,000 | 9,400 | $ 7,400 | |||||||||||
Residential mortgage originator | Loans held-for-sale, residential | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Acquisitions and originations of mortgage financing | $ 36,400 | 80,800 | |||||||||||||
Residential mortgage originator | Loans held-for-sale, residential | Subordinated Loans | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Acquisitions and originations of mortgage financing | $ 2,000 | ||||||||||||||
Fixed interest rate | 8.00% | ||||||||||||||
LNR | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Purchase price | $ 273,600 | $ 273,600 | $ 273,600 | ||||||||||||
CMBS | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Payments to acquire security | $ 9,700 | $ 84,100 | |||||||||||||
Number of regional malls by which investment is secured | item | 5 | ||||||||||||||
CMBS | LNR | REO Portfolio | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Net real estate assets acquired | 27,700 | 19,700 | |||||||||||||
Purchase price | $ 28,000 | $ 19,900 | |||||||||||||
First mortgage loan participation | Purchase of First Mortgage Loan Participation | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Acquisitions and originations of mortgage financing | $ 130,000 | ||||||||||||||
Number of U.S power plants secured | item | 4 | ||||||||||||||
Number of properties | item | 4 | ||||||||||||||
First mortgage loan participation | Purchase of First Mortgage Loan Participation | LIBOR | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Spread on interest rate basis (as a percent) | 4.00% | ||||||||||||||
First mortgage loan participation | Purchase of first mortgage loan participation for acquisition of luxury resort, spain from SEREF | |||||||||||||||
Related-Party Transactions | |||||||||||||||
Acquisitions and originations of mortgage financing | $ 55,000 |
Stockholders' Equity and Non-_3
Stockholders' Equity and Non-Controlling Interests (Details) | Aug. 08, 2018$ / shares | May 04, 2018$ / shares | Feb. 28, 2018$ / shares | Mar. 31, 2018USD ($) | Sep. 30, 2018USD ($)$ / sharesshares | Mar. 31, 2018shares | Sep. 30, 2017USD ($)$ / shares | Mar. 31, 2018shares | Sep. 30, 2018USD ($)item$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | Mar. 29, 2017USD ($) | Feb. 28, 2017USD ($) |
Stockholders' Equity | |||||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 | ||||||
Shares issued under ATM Agreement | shares | 0 | 0 | |||||||||||
Authorized amount of share repurchases | $ 500,000,000 | ||||||||||||
Common stock repurchased (in shares) | shares | 573,255 | 0 | |||||||||||
Cost of common stock repurchased | $ 12,090,000 | ||||||||||||
Remaining capacity under repurchase program | $ 250,100,000 | 250,100,000 | |||||||||||
Proceeds from Issuance of Common Stock | 459,000 | $ 541,000 | |||||||||||
Net income attributable to non-controlling interests | 4,845,000 | $ 4,371,000 | 17,567,000 | 10,720,000 | |||||||||
Payment to acquire non-controlling interest | 247,147,000 | $ 7,519,000 | |||||||||||
Minority Interest | 261,040,000 | $ 261,040,000 | $ 100,787,000 | ||||||||||
Number of business days after the closing of the final property | item | 3 | ||||||||||||
Redemption cost | shares | 0 | ||||||||||||
Convertible Senior Notes | |||||||||||||
Stockholders' Equity | |||||||||||||
Common stock repurchased (in shares) | shares | 0 | ||||||||||||
Debt repurchased amount | $ 0 | $ 0 | $ 250,700,000 | ||||||||||
2019 Notes | |||||||||||||
Stockholders' Equity | |||||||||||||
Shares issued to settle redemption | shares | 11,200,000 | ||||||||||||
Value of shares issued to settle redemption | $ 235,500,000 | ||||||||||||
Class A Units | |||||||||||||
Stockholders' Equity | |||||||||||||
Redemption cost | shares | 0 | ||||||||||||
Woodstar II Portfolio | Class A Units | |||||||||||||
Stockholders' Equity | |||||||||||||
Net income attributable to non-controlling interests | $ 4,800,000 | $ 11,900,000 | |||||||||||
Shares issued | shares | 424,642 | 6,979,089 | 10,183,505 | ||||||||||
Woodstar II Portfolio | Class A Units | SPT Dolphin | |||||||||||||
Stockholders' Equity | |||||||||||||
Period after issuance date for redemption | 6 months | ||||||||||||
REIS Equity Portfolio | |||||||||||||
Stockholders' Equity | |||||||||||||
Non-controlling interest | $ 300,000 | ||||||||||||
Payment to acquire non-controlling interest | $ 3,300,000 |
Stockholders' Equity and Non-_4
Stockholders' Equity and Non-Controlling Interests - Equity Incentive Plans (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Apr. 30, 2018 | Mar. 31, 2017 | May 31, 2015 | Sep. 30, 2018 | May 31, 2017 | |
Equity Incentive Plans | |||||
Granted (in shares) | 1,563,608 | ||||
Starwood Property Trust, Inc. Equity Plan and Manager Equity Plan | |||||
Equity Incentive Plans | |||||
Number of shares of authorized for issuance | 11,000,000 | ||||
Number of shares available for future grants | 9,300,000 | ||||
Starwood Property Trust, Inc. Equity Plan | |||||
Equity Incentive Plans | |||||
Granted (in shares) | 788,608 | ||||
Starwood Property Trust, Inc. Manager Equity Plan | |||||
Equity Incentive Plans | |||||
Granted (in shares) | 775,000 | ||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||
Equity Incentive Plans | |||||
Granted (in shares) | 775,000 | 1,000,000 | 675,000 | ||
Awards granted, fair value | $ 16,329,000 | $ 22,240,000 | $ 16,511,000 | ||
Award vesting period | 3 years | 3 years | 3 years |
Stockholders' Equity and Non-_5
Stockholders' Equity and Non-Controlling Interests - Non-Vested Shares (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 1,691,389 |
Granted (in shares) | 1,563,608 |
Vested (in shares) | (702,452) |
Forfeited (in shares) | (8,886) |
Balance at the end of the period (in shares) | 2,543,659 |
Weighted Average Grant Date Fair Value (per share) | |
Balance at the beginning of period (in dollars per share) | $ / shares | $ 21.95 |
Granted (in dollars per share) | $ / shares | 21.25 |
Vested (in dollars per share) | $ / shares | 21.78 |
Forfeited (in dollars per share) | $ / shares | 21.39 |
Balance at the end of period (in dollars per share) | $ / shares | $ 21.57 |
Starwood Property Trust, Inc. Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 885,138 |
Granted (in shares) | 788,608 |
Vested (in shares) | (267,037) |
Forfeited (in shares) | (8,886) |
Balance at the end of the period (in shares) | 1,397,823 |
Starwood Property Trust, Inc. Manager Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 806,251 |
Granted (in shares) | 775,000 |
Vested (in shares) | (435,415) |
Balance at the end of the period (in shares) | 1,145,836 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | $ 84,536 | $ 88,428 | $ 293,698 | $ 308,166 |
Less: Income attributable to participating shares not already deducted as non-controlling interests | (970) | (761) | (2,725) | (2,489) |
Basic earnings | 83,566 | 87,667 | 290,973 | 305,677 |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | 84,536 | 88,428 | 293,698 | 308,166 |
Less: Income attributable to participating shares not already deducted as non-controlling interests | (970) | (761) | (2,725) | (2,489) |
Add: Interest expense on Convertible Notes | 102,658 | 76,431 | 281,433 | 213,608 |
Add: Loss on extinguishment of debt | 2,540 | 2,726 | 5,916 | |
Diluted earnings | $ 83,566 | $ 87,667 | $ 313,885 | $ 305,677 |
Number of Shares: | ||||
Basic - Average shares outstanding | 265,355 | 259,759 | 262,356 | 259,412 |
Effect of dilutive securities - Convertible Notes (in shares) | 2,313 | 25,675 | 2,284 | |
Effect of dilutive securities - Contingently issuable shares (in shares) | 99 | 236 | 99 | 236 |
Effect of dilutive securities - Unvested non-participating shares | 2 | 129 | 123 | |
Diluted - Average shares outstanding | 265,456 | 262,437 | 288,130 | 262,055 |
Basic: | ||||
Basic (in dollars per share) | $ 0.31 | $ 0.34 | $ 1.11 | $ 1.18 |
Diluted: | ||||
Diluted (in dollars per share) | $ 0.31 | $ 0.33 | $ 1.09 | $ 1.17 |
Convertible Senior Notes | ||||
Continuing Operations: | ||||
Add: Interest expense on Convertible Notes | $ 21,102 | |||
Add: Loss on extinguishment of debt | $ 1,810 |
Earnings per Share - Dilutive a
Earnings per Share - Dilutive and Antidilutive securities (Details) shares in Thousands, item in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017shares | Sep. 30, 2018USD ($)itemshares | Sep. 30, 2017shares | |
Antidilutive securities and effect of dilutive securities | |||
Effect of dilutive securities - Convertible Notes (in shares) | 2,313 | 25,675 | 2,284 |
Class A Units | |||
Antidilutive securities and effect of dilutive securities | |||
Potential shares of common stock contingently issuable upon conversion of the Class A units | item | 10.2 | ||
2019 Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Amount by which if-converted value of the Notes exceed principal amount | $ | $ 12 | ||
Participating securities | |||
Antidilutive securities and effect of dilutive securities | |||
Number of anti-dilutive common shares excluded from the calculation of diluted income per share | 12,200 | 1,600 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Changes in AOCI by component | ||||
Beginning balance | $ 68,134 | $ 55,981 | $ 69,924 | $ 36,138 |
OCI before reclassifications | (230) | 9,309 | (1,918) | 29,217 |
Amounts reclassified from AOCI | 16 | (19) | (86) | (84) |
Net period OCI | (214) | 9,290 | (2,004) | 29,133 |
Ending balance | 67,920 | 65,271 | 67,920 | 65,271 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | ||||
Changes in AOCI by component | ||||
Beginning balance | 7 | 52 | 25 | (26) |
OCI before reclassifications | (3) | 8 | 45 | |
Amounts reclassified from AOCI | (6) | (19) | (32) | 11 |
Net period OCI | (6) | (22) | (24) | 56 |
Ending balance | 1 | 30 | 1 | 30 |
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | ||||
Changes in AOCI by component | ||||
Beginning balance | 60,075 | 51,682 | 57,889 | 44,929 |
OCI before reclassifications | 715 | 3,975 | 2,977 | 10,823 |
Amounts reclassified from AOCI | 22 | (54) | (95) | |
Net period OCI | 737 | 3,975 | 2,923 | 10,728 |
Ending balance | 60,812 | 55,657 | 60,812 | 55,657 |
Foreign Currency Translation | ||||
Changes in AOCI by component | ||||
Beginning balance | 8,052 | 4,247 | 12,010 | (8,765) |
OCI before reclassifications | (945) | 5,337 | (4,903) | 18,349 |
Net period OCI | (945) | 5,337 | (4,903) | 18,349 |
Ending balance | $ 7,107 | $ 9,584 | $ 7,107 | $ 9,584 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income - Impact of Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Income | ||||
Interest expense | $ (102,658) | $ (76,431) | $ (281,433) | $ (213,608) |
Interest income from investment securities | 11,508 | 12,451 | 37,567 | 40,045 |
Net income | 89,381 | 92,799 | 311,265 | 318,886 |
Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Net income | (16) | 19 | 86 | 84 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | Interest rate contracts | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest expense | 6 | $ 19 | 32 | (11) |
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | ||||
Accumulated Other Comprehensive Income | ||||
Total | (22) | 54 | 95 | |
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest income from investment securities | 46 | $ 95 | ||
Gain on sale of investments and other assets, net | $ (22) | $ 8 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets and liabilities measured at fair value | ||
Permitted reinvestment under static investment in VIEs | $ 0 | |
Marketable securities | 763,450 | $ 718,203 |
Domestic servicing rights | 21,768 | 30,759 |
Derivative assets | 59,807 | 33,898 |
VIE Assets | 48,034,610 | 51,045,874 |
Derivative liabilities | 35,386 | 36,200 |
VIE Liabilities | 46,945,674 | 50,000,010 |
Fair value measurements on recurring basis | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 913,505 | 745,743 |
Derivative assets | 59,807 | 33,898 |
VIE Assets | 48,034,610 | 51,045,874 |
Total | 49,319,244 | 52,141,009 |
Derivative liabilities | 35,386 | 36,200 |
VIE Liabilities | 46,945,674 | 50,000,010 |
Total | 46,981,060 | 50,036,210 |
Fair value measurements on recurring basis | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 21,768 | 30,759 |
Fair value measurements on recurring basis | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 227,867 | 247,021 |
Fair value measurements on recurring basis | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 48,589 | 24,191 |
Fair value measurements on recurring basis | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 13,098 | 13,523 |
Fair value measurements on recurring basis | Level I | ||
Assets and liabilities measured at fair value | ||
Total | 13,098 | 13,523 |
Fair value measurements on recurring basis | Level I | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 13,098 | 13,523 |
Fair value measurements on recurring basis | Level II | ||
Assets and liabilities measured at fair value | ||
Derivative assets | 59,807 | 33,898 |
Total | 62,581 | 33,898 |
Derivative liabilities | 35,386 | 36,200 |
VIE Liabilities | 45,152,469 | 47,811,073 |
Total | 45,187,855 | 47,847,273 |
Fair value measurements on recurring basis | Level II | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 2,774 | |
Fair value measurements on recurring basis | Level III | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 913,505 | 745,743 |
VIE Assets | 48,034,610 | 51,045,874 |
Total | 49,243,565 | 52,093,588 |
VIE Liabilities | 1,793,205 | 2,188,937 |
Total | 1,793,205 | 2,188,937 |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 21,768 | 30,759 |
Fair value measurements on recurring basis | Level III | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 227,867 | 247,021 |
Fair value measurements on recurring basis | Level III | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | $ 45,815 | $ 24,191 |
Fair Value - Level III (Details
Fair Value - Level III (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Total realized and unrealized gains (losses): | ||||
Included in earnings: OTTI | $ (109) | |||
Included in earnings: Net accretion | $ 12,013 | 11,669 | ||
Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | $ 47,223,205 | $ 52,657,131 | 49,904,651 | 64,941,714 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (886,779) | (3,368,402) | (4,130,674) | (15,003,948) |
Included in earnings: OTTI | (109) | |||
Included in earnings: Net accretion | 2,526 | 3,187 | 7,967 | 10,375 |
Included in OCI | 737 | 3,975 | 2,923 | 10,728 |
Purchases / Originations | 597,318 | 536,207 | 1,509,473 | 1,546,595 |
Sales | (571,199) | (517,350) | (1,053,771) | (998,962) |
Issuances | (18,901) | (1,469) | (26,849) | (11,657) |
Cash repayments / receipts | (52,447) | (44,919) | (233,994) | (118,465) |
Transfers into Level III | (231,925) | (233,367) | (922,884) | (616,794) |
Transfers out of Level III | 108,123 | 67,272 | 230,463 | 231,012 |
Consolidations of VIEs | 1,604,072 | 888,979 | 3,419,142 | 2,016,931 |
Deconsolidations of VIEs | (324,370) | (133,548) | (1,256,087) | (2,149,724) |
Balance at the end of the period | 47,450,360 | 49,857,696 | 47,450,360 | 49,857,696 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (891,837) | (3,386,854) | (4,145,260) | (15,037,479) |
VIE liabilities | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | (2,002,115) | (2,164,593) | (2,188,937) | (2,585,369) |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 371,310 | 151,273 | 906,360 | 749,757 |
Issuances | (18,901) | (1,469) | (26,849) | (11,657) |
Cash repayments / receipts | (17,268) | (4,910) | (75,078) | (40,946) |
Transfers into Level III | (259,701) | (233,367) | (950,660) | (616,794) |
Transfers out of Level III | 108,123 | 67,272 | 425,973 | 231,012 |
Consolidations of VIEs | (23,095) | (75,585) | (23,095) | (75,585) |
Deconsolidations of VIEs | 48,442 | 1,596 | 139,081 | 89,799 |
Balance at the end of the period | (1,793,205) | (2,259,783) | (1,793,205) | (2,259,783) |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 371,310 | 151,273 | 906,360 | 749,757 |
Loans held-for-sale | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 897,259 | 610,116 | 745,743 | 63,279 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 4,036 | 19,485 | 26,669 | 45,484 |
Purchases / Originations | 597,318 | 524,409 | 1,508,010 | 1,527,364 |
Sales | (565,990) | (517,350) | (1,047,755) | (987,828) |
Cash repayments / receipts | (19,118) | (28,036) | (123,652) | (39,675) |
Transfers out of Level III | (195,510) | |||
Balance at the end of the period | 913,505 | 608,624 | 913,505 | 608,624 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (2,501) | (2,597) | (2,023) | (2,621) |
RMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 235,796 | 256,397 | 247,021 | 253,915 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 100 | 241 | ||
Included in earnings: OTTI | (109) | |||
Included in earnings: Net accretion | 2,526 | 3,187 | 7,967 | 10,375 |
Included in OCI | 737 | 3,975 | 2,923 | 10,728 |
Purchases / Originations | 7,433 | |||
Sales | (2,046) | (2,853) | ||
Cash repayments / receipts | (9,246) | (10,307) | (27,432) | (29,090) |
Balance at the end of the period | 227,867 | 253,252 | 227,867 | 253,252 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 2,526 | 3,187 | 7,913 | 10,159 |
CMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 24,650 | 13,848 | 24,191 | 31,546 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 63 | (673) | 76 | (4,359) |
Purchases / Originations | 11,798 | 1,463 | 11,798 | |
Sales | (3,163) | (3,163) | (11,134) | |
Cash repayments / receipts | (6,815) | (1,666) | (7,832) | (8,754) |
Transfers into Level III | 27,776 | 27,776 | ||
Consolidations of VIEs | 3,304 | 3,304 | ||
Deconsolidations of VIEs | 534 | 4,744 | ||
Balance at the end of the period | 45,815 | 23,841 | 45,815 | 23,841 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (884) | (230) | (1,252) | 56 |
Domestic Servicing Rights | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 22,742 | 38,648 | 30,759 | 55,082 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (974) | (4,867) | (8,991) | (21,301) |
Balance at the end of the period | 21,768 | 33,781 | 21,768 | 33,781 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (974) | (4,867) | (8,991) | (21,301) |
VIE Assets | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 48,044,873 | 53,902,715 | 51,045,874 | 67,123,261 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (1,261,314) | (3,533,620) | (5,055,029) | (15,773,529) |
Consolidations of VIEs | 1,623,863 | 964,564 | 3,438,933 | 2,092,516 |
Deconsolidations of VIEs | (372,812) | (135,678) | (1,395,168) | (2,244,267) |
Balance at the end of the period | 48,034,610 | 51,197,981 | 48,034,610 | 51,197,981 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | $ (1,261,314) | $ (3,533,620) | $ (5,055,029) | $ (15,773,529) |
Fair Value - Financial Instrume
Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Financial assets not carried at fair value: | ||
HTM securities | $ 473,896 | $ 433,468 |
Financial liabilities not carried at fair value: | ||
Unsecured senior notes | 2,024,570 | 2,125,235 |
Carrying Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings | 8,988,287 | 6,636,898 |
HTM securities | 473,896 | 433,468 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 8,660,835 | 5,847,241 |
Unsecured senior notes | 2,024,570 | 2,125,235 |
Fair Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings | 9,043,997 | 6,729,302 |
HTM securities | 474,395 | 428,338 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 8,582,213 | 5,810,998 |
Unsecured senior notes | $ 2,020,957 | $ 2,191,285 |
Fair Value - Significant unobse
Fair Value - Significant unobservable inputs (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 62,921,479 | $ 62,941,289 |
Carrying Value | (58,039,202) | $ (58,362,088) |
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 | $ (1,793,205) | |
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) | 951.30% | 826.60% |
Duration | 14 years | 14 years |
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 | $ 913,505 | |
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) | 4.70% | 4.30% |
Duration | 2 years 2 months 12 days | 1 year 9 months 18 days |
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) | 6.00% | 6.00% |
Duration | 11 years 6 months | 12 years 1 month 6 days |
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 | $ 227,867 | |
Portfolio percentage | 58.00% | 81.00% |
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) | 3.10% | 2.50% |
Constant default rate (as a percent) | 1.00% | 0.90% |
Loss severity (as a percent) | 0.00% | 14.00% |
Delinquency rate (as a percent) | 4.00% | 4.00% |
Servicer advances (as a percent) | 23.00% | 20.00% |
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% | 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) | 21.80% | 21.40% |
Constant default rate (as a percent) | 5.50% | 5.80% |
Loss severity (as a percent) | 79.00% | 75.00% |
Delinquency rate (as a percent) | 32.00% | 33.00% |
Servicer advances (as a percent) | 82.00% | 83.00% |
Annual coupon deterioration (as a percent) | 1.30% | 0.80% |
Putback amount per projected total collateral loss (as a percent) | 7.00% | 7.00% |
Loss severity for specified percentage of portfolio (as a percent) | 80.00% | 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 | $ 45,815 | |
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) | 207.50% | 168.50% |
Duration | 9 years 8 months 12 days | 9 years 8 months 12 days |
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 | $ 21,768 | |
Yield (as a percent) | 7.75% | 7.75% |
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 | $ 48,034,610 | |
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) | 951.30% | 826.60% |
Duration | 14 years | 14 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Income Taxes | ||
Assets | $ 62,921,479 | $ 62,941,289 |
Cash | 265,757 | 369,448 |
LNR | TRS entities | ||
Income Taxes | ||
Assets | 2,400,000 | 673,100 |
Cash | $ 29,300 | $ 24,100 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of statutory tax to effective tax | ||||
Federal statutory tax rate | $ 20,509 | $ 35,915 | $ 68,406 | $ 118,010 |
REIT and other non-taxable income | (13,628) | (26,242) | (57,128) | (99,668) |
State income taxes | 1,803 | 200 | 2,954 | 81 |
Federal benefit of state tax deduction | (378) | (70) | (620) | (28) |
Other | (25) | 13 | 868 | (110) |
Total | $ 8,281 | $ 9,816 | $ 14,480 | $ 18,285 |
Reconciliation of statutory tax rate to effective tax rate | ||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 21.00% | 35.00% |
REIT and other non-taxable income (as a percent) | (13.90%) | (25.50%) | (17.60%) | (29.60%) |
State income taxes (as a percent) | 1.80% | 0.20% | 0.90% | |
Federal benefit of state tax deduction (as a percent) | (0.40%) | (0.10%) | 0.20% | |
Other (as a percent) | 0.30% | |||
Effective tax rate (as a percent) | 8.50% | 9.60% | 4.40% | 5.40% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Sep. 30, 2018 $ in Millions | instrument | item | USD ($) |
Operating leases | |||
Number of contracts | item | 312 | ||
Interest rate contracts | Derivatives designated as hedging instruments | |||
Operating leases | |||
Number of contracts | 13 | 1 | |
Commitments | Real Estate Investment Lending | |||
Operating leases | |||
Value of loans with future funding commitments | $ 1,800 | ||
Value of loans with future funding commitments expected to fund | 1,600 | ||
Outstanding residential mortgage loan purchase commitment | 25 | ||
Agreement to purchase | 600 | ||
Commitments | Infrastructure Lending Segment | |||
Operating leases | |||
Value of loans with future funding commitments | 454.4 | ||
Revolvers and letters of credit | Infrastructure Lending Segment | |||
Operating leases | |||
Value of loans with future funding commitments | 254.9 | ||
Outstanding | 34.5 | ||
Delayed draw term loans | Infrastructure Lending Segment | |||
Operating leases | |||
Value of loans with future funding commitments | $ 199.5 |
Segment Data - Results of Opera
Segment Data - Results of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Interest income from loans | $ 154,501 | $ 138,599 | $ 443,825 | $ 371,094 |
Interest income from investment securities | 11,508 | 12,451 | 37,567 | 40,045 |
Servicing fees | 27,824 | 14,842 | 71,206 | 47,572 |
Rental income | 91,132 | 60,153 | 261,133 | 176,161 |
Other revenues | 754 | 722 | 2,131 | 2,184 |
Total revenues | 285,719 | 226,767 | 815,862 | 637,056 |
Costs and expenses: | ||||
Management fees | 26,519 | 30,980 | 84,655 | 79,997 |
Interest expense | 102,658 | 76,431 | 281,433 | 213,608 |
General and administrative | 31,203 | 32,892 | 98,873 | 95,841 |
Acquisition and investment pursuit costs | 6,527 | 1,024 | 8,465 | 2,232 |
Costs of rental operations | 30,191 | 23,799 | 92,781 | 67,701 |
Depreciation and amortization | 34,293 | 22,871 | 103,187 | 67,131 |
Loan loss allowance, net | 929 | (171) | 27,726 | (3,170) |
Other expense | 76 | 376 | 677 | 1,276 |
Total costs and expenses | 232,396 | 188,202 | 697,797 | 524,616 |
Income before other income (loss), income taxes and non-controlling interests | 53,323 | 38,565 | 118,065 | 112,440 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 33,289 | 56,177 | 129,888 | 203,108 |
Change in fair value of servicing rights | (974) | (4,867) | (8,991) | (21,301) |
Change in fair value of investment securities, net | 301 | (397) | 7,854 | (4,061) |
Change in fair value of mortgage loans held-for-sale, net | 3,940 | 19,485 | 26,573 | 45,484 |
Earnings (loss) from unconsolidated entities | 2,625 | (4,689) | 6,633 | 27,763 |
Gain (loss) on sale of investments and other assets, net | 1,462 | 11,877 | 25,559 | 17,004 |
Gain (loss) on derivative financial instruments, net | 11,735 | (24,224) | 27,498 | (66,159) |
Foreign currency gain (loss), net | (4,078) | 10,660 | (3,793) | 28,434 |
OTTI/Impairment | (109) | |||
Loss on extinguishment of debt | (2,540) | (2,726) | (5,916) | |
Other income, net | (1,421) | 28 | (815) | 484 |
Total other income | 44,339 | 64,050 | 207,680 | 224,731 |
Income before income taxes | 97,662 | 102,615 | 325,745 | 337,171 |
Income tax provision | (8,281) | (9,816) | (14,480) | (18,285) |
Net income | 89,381 | 92,799 | 311,265 | 318,886 |
Net income attributable to Starwood Property Trust, Inc. | (4,845) | (4,371) | (17,567) | (10,720) |
Net income attributable to Starwood Property Trust, Inc. | 84,536 | 88,428 | 293,698 | 308,166 |
Operating Segments and Corporate | ||||
Revenues: | ||||
Interest income from loans | 154,501 | 138,599 | 443,825 | 371,094 |
Interest income from investment securities | 44,904 | 43,280 | 133,144 | 140,638 |
Servicing fees | 34,198 | 23,235 | 92,534 | 87,405 |
Rental income | 91,132 | 60,153 | 261,133 | 176,161 |
Other revenues | 796 | 786 | 2,278 | 2,433 |
Total revenues | 325,531 | 266,053 | 932,914 | 777,731 |
Costs and expenses: | ||||
Management fees | 26,408 | 30,870 | 84,345 | 79,787 |
Interest expense | 102,934 | 76,708 | 282,254 | 214,429 |
General and administrative | 31,117 | 32,810 | 98,617 | 95,598 |
Acquisition and investment pursuit costs | 6,527 | 1,024 | 8,465 | 2,232 |
Costs of rental operations | 30,191 | 23,799 | 92,781 | 67,701 |
Depreciation and amortization | 34,293 | 22,871 | 103,187 | 67,131 |
Loan loss allowance, net | 929 | (171) | 27,726 | (3,170) |
Other expense | 76 | 376 | 677 | 1,276 |
Total costs and expenses | 232,475 | 188,287 | 698,052 | 524,984 |
Income before other income (loss), income taxes and non-controlling interests | 93,056 | 77,766 | 234,862 | 252,747 |
Other income (loss): | ||||
Change in fair value of servicing rights | (1,994) | (5,652) | (14,417) | (28,956) |
Change in fair value of investment securities, net | (4,728) | 14,238 | 24,139 | 45,562 |
Change in fair value of mortgage loans held-for-sale, net | 3,940 | 19,485 | 26,573 | 45,484 |
Earnings (loss) from unconsolidated entities | 2,368 | (2,658) | 8,083 | 40,900 |
Gain (loss) on sale of investments and other assets, net | 1,462 | 11,877 | 25,559 | 17,004 |
Gain (loss) on derivative financial instruments, net | 11,735 | (24,224) | 27,498 | (66,159) |
Foreign currency gain (loss), net | (4,078) | 10,660 | (3,793) | 28,434 |
OTTI/Impairment | (109) | |||
Loss on extinguishment of debt | (2,540) | (2,726) | (5,916) | |
Other income, net | (1,421) | 28 | (815) | 1,097 |
Total other income | 4,744 | 23,754 | 90,101 | 77,341 |
Income before income taxes | 97,800 | 101,520 | 324,963 | 330,088 |
Income tax provision | (8,281) | (9,816) | (14,480) | (18,285) |
Net income | 89,519 | 91,704 | 310,483 | 311,803 |
Net income attributable to Starwood Property Trust, Inc. | (4,983) | (3,276) | (16,785) | (3,637) |
Net income attributable to Starwood Property Trust, Inc. | 84,536 | 88,428 | 293,698 | 308,166 |
Operating segment | Real Estate Investment Lending | ||||
Revenues: | ||||
Interest income from loans | 147,913 | 134,149 | 431,153 | 360,188 |
Interest income from investment securities | 10,320 | 11,540 | 33,689 | 35,870 |
Servicing fees | 98 | 142 | 313 | 568 |
Other revenues | 265 | 181 | 683 | 553 |
Total revenues | 158,596 | 146,012 | 465,838 | 397,179 |
Costs and expenses: | ||||
Management fees | 453 | 482 | 1,396 | 1,405 |
Interest expense | 43,322 | 27,929 | 110,169 | 72,372 |
General and administrative | 7,016 | 5,302 | 19,962 | 14,872 |
Acquisition and investment pursuit costs | 341 | 807 | 2,253 | 1,707 |
Depreciation and amortization | 17 | 17 | 50 | 50 |
Loan loss allowance, net | 929 | (171) | 27,726 | (3,170) |
Other expense | 76 | 72 | 230 | 72 |
Total costs and expenses | 52,154 | 34,438 | 161,786 | 87,308 |
Income before other income (loss), income taxes and non-controlling interests | 106,442 | 111,574 | 304,052 | 309,871 |
Other income (loss): | ||||
Change in fair value of investment securities, net | 238 | 276 | 16 | 299 |
Change in fair value of mortgage loans held-for-sale, net | 1,343 | (397) | (165) | (549) |
Earnings (loss) from unconsolidated entities | 514 | 848 | 3,761 | 2,548 |
Gain (loss) on sale of investments and other assets, net | 47 | 461 | (59) | |
Gain (loss) on derivative financial instruments, net | 7,278 | (10,813) | 15,927 | (30,274) |
Foreign currency gain (loss), net | (3,546) | 10,657 | (3,260) | 28,402 |
OTTI/Impairment | (109) | |||
Loss on extinguishment of debt | (730) | (730) | ||
Other income, net | (1) | 42 | ||
Total other income | 5,143 | 571 | 16,052 | 258 |
Income before income taxes | 111,585 | 112,145 | 320,104 | 310,129 |
Income tax provision | (314) | 11 | (2,981) | (331) |
Net income | 111,271 | 112,156 | 317,123 | 309,798 |
Net income attributable to Starwood Property Trust, Inc. | (365) | (357) | (1,087) | (1,064) |
Net income attributable to Starwood Property Trust, Inc. | 110,906 | 111,799 | 316,036 | 308,734 |
Operating segment | Infrastructure Lending Segment | ||||
Revenues: | ||||
Interest income from loans | 3,053 | |||
Interest income from investment securities | 107 | |||
Other revenues | 44 | |||
Total revenues | 3,204 | |||
Costs and expenses: | ||||
Interest expense | 2,258 | |||
General and administrative | 537 | |||
Acquisition and investment pursuit costs | 6,725 | |||
Total costs and expenses | 9,520 | |||
Income before other income (loss), income taxes and non-controlling interests | (6,316) | |||
Other income (loss): | ||||
Gain (loss) on derivative financial instruments, net | 455 | |||
Foreign currency gain (loss), net | (531) | |||
Total other income | (76) | |||
Income before income taxes | (6,392) | |||
Net income | (6,392) | |||
Net income attributable to Starwood Property Trust, Inc. | (6,392) | |||
Operating segment | LNR | ||||
Revenues: | ||||
Interest income from loans | 3,535 | 4,450 | 9,619 | 10,906 |
Interest income from investment securities | 34,477 | 31,740 | 99,348 | 104,768 |
Servicing fees | 34,100 | 23,093 | 92,221 | 86,837 |
Rental income | 15,065 | 12,490 | 43,955 | 37,366 |
Other revenues | 229 | 441 | 973 | 1,450 |
Total revenues | 87,406 | 72,214 | 246,116 | 241,327 |
Costs and expenses: | ||||
Management fees | 18 | 18 | 54 | 54 |
Interest expense | 7,396 | 5,710 | 18,298 | 14,924 |
General and administrative | 19,131 | 24,167 | 64,006 | 69,536 |
Acquisition and investment pursuit costs | (539) | (28) | (467) | 9 |
Costs of rental operations | 7,139 | 5,139 | 20,250 | 15,858 |
Depreciation and amortization | 5,828 | 5,002 | 16,482 | 14,793 |
Other expense | 207 | 447 | 1,141 | |
Total costs and expenses | 38,973 | 40,215 | 119,070 | 116,315 |
Income before other income (loss), income taxes and non-controlling interests | 48,433 | 31,999 | 127,046 | 125,012 |
Other income (loss): | ||||
Change in fair value of servicing rights | (1,994) | (5,652) | (14,417) | (28,956) |
Change in fair value of investment securities, net | (4,966) | 13,962 | 24,123 | 45,263 |
Change in fair value of mortgage loans held-for-sale, net | 2,597 | 19,882 | 26,738 | 46,033 |
Earnings (loss) from unconsolidated entities | (134) | 30,225 | 2,916 | 67,134 |
Gain (loss) on sale of investments and other assets, net | 1,415 | 11,877 | 18,215 | 16,986 |
Gain (loss) on derivative financial instruments, net | 3,076 | (2,135) | 7,720 | (3,617) |
Foreign currency gain (loss), net | 4 | (2) | 16 | |
Loss on extinguishment of debt | (186) | |||
Other income, net | (1,422) | 28 | (1,365) | 1,097 |
Total other income | (1,428) | 68,191 | 63,742 | 143,956 |
Income before income taxes | 47,005 | 100,190 | 190,788 | 268,968 |
Income tax provision | (7,842) | (9,827) | (9,502) | (17,954) |
Net income | 39,163 | 90,363 | 181,286 | 251,014 |
Net income attributable to Starwood Property Trust, Inc. | 151 | (2,919) | (3,792) | (2,573) |
Net income attributable to Starwood Property Trust, Inc. | 39,314 | 87,444 | 177,494 | 248,441 |
Operating segment | Property Segment | ||||
Revenues: | ||||
Rental income | 76,067 | 47,663 | 217,178 | 138,795 |
Other revenues | 169 | 164 | 351 | 430 |
Total revenues | 76,236 | 47,827 | 217,529 | 139,225 |
Costs and expenses: | ||||
Interest expense | 19,483 | 11,360 | 55,397 | 32,466 |
General and administrative | 1,680 | 1,090 | 5,510 | 3,471 |
Acquisition and investment pursuit costs | 245 | (46) | 516 | |
Costs of rental operations | 23,052 | 18,660 | 72,531 | 51,843 |
Depreciation and amortization | 28,448 | 17,852 | 86,655 | 52,288 |
Other expense | 97 | 63 | ||
Total costs and expenses | 72,663 | 49,304 | 220,047 | 140,647 |
Income before other income (loss), income taxes and non-controlling interests | 3,573 | (1,477) | (2,518) | (1,422) |
Other income (loss): | ||||
Earnings (loss) from unconsolidated entities | 1,988 | (33,731) | 1,406 | (28,782) |
Gain (loss) on sale of investments and other assets, net | 6,883 | 77 | ||
Gain (loss) on derivative financial instruments, net | 5,895 | (11,276) | 27,734 | (32,268) |
Foreign currency gain (loss), net | (1) | (1) | 16 | |
Other income, net | 2 | 508 | ||
Total other income | 7,884 | (45,008) | 36,531 | (60,957) |
Income before income taxes | 11,457 | (46,485) | 34,013 | (62,379) |
Income tax provision | (125) | (1,997) | ||
Net income | 11,332 | (46,485) | 32,016 | (62,379) |
Net income attributable to Starwood Property Trust, Inc. | (4,769) | (11,906) | ||
Net income attributable to Starwood Property Trust, Inc. | 6,563 | (46,485) | 20,110 | (62,379) |
Corporate | ||||
Revenues: | ||||
Other revenues | 89 | 227 | ||
Total revenues | 89 | 227 | ||
Costs and expenses: | ||||
Management fees | 25,937 | 30,370 | 82,895 | 78,328 |
Interest expense | 30,475 | 31,709 | 96,132 | 94,667 |
General and administrative | 2,753 | 2,251 | 8,602 | 7,719 |
Total costs and expenses | 59,165 | 64,330 | 187,629 | 180,714 |
Income before other income (loss), income taxes and non-controlling interests | (59,076) | (64,330) | (187,402) | (180,714) |
Other income (loss): | ||||
Gain (loss) on derivative financial instruments, net | (4,969) | (24,338) | ||
Loss on extinguishment of debt | (1,810) | (1,810) | (5,916) | |
Total other income | (6,779) | (26,148) | (5,916) | |
Income before income taxes | (65,855) | (64,330) | (213,550) | (186,630) |
Net income | (65,855) | (64,330) | (213,550) | (186,630) |
Net income attributable to Starwood Property Trust, Inc. | (65,855) | (64,330) | (213,550) | (186,630) |
LNR VIEs | ||||
Revenues: | ||||
Interest income from investment securities | (33,396) | (30,829) | (95,577) | (100,593) |
Servicing fees | (6,374) | (8,393) | (21,328) | (39,833) |
Other revenues | (42) | (64) | (147) | (249) |
Total revenues | (39,812) | (39,286) | (117,052) | (140,675) |
Costs and expenses: | ||||
Management fees | 111 | 110 | 310 | 210 |
Interest expense | (276) | (277) | (821) | (821) |
General and administrative | 86 | 82 | 256 | 243 |
Total costs and expenses | (79) | (85) | (255) | (368) |
Income before other income (loss), income taxes and non-controlling interests | (39,733) | (39,201) | (116,797) | (140,307) |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 33,289 | 56,177 | 129,888 | 203,108 |
Change in fair value of servicing rights | 1,020 | 785 | 5,426 | 7,655 |
Change in fair value of investment securities, net | 5,029 | (14,635) | (16,285) | (49,623) |
Earnings (loss) from unconsolidated entities | 257 | (2,031) | (1,450) | (13,137) |
Other income, net | (613) | |||
Total other income | 39,595 | 40,296 | 117,579 | 147,390 |
Income before income taxes | (138) | 1,095 | 782 | 7,083 |
Net income | (138) | 1,095 | 782 | 7,083 |
Net income attributable to Starwood Property Trust, Inc. | $ 138 | $ (1,095) | $ (782) | $ (7,083) |
Segment Data - Balance sheets (
Segment Data - Balance sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets: | ||||||
Cash and cash equivalents | $ 265,757 | $ 369,448 | ||||
Restricted cash | 124,264 | 48,825 | ||||
Loans held-for-investment, net | 8,500,674 | 6,562,495 | ||||
Loans held-for-sale | 1,326,837 | 745,743 | ||||
Loans transferred as secured borrowings | 74,281 | 74,403 | ||||
Investment securities | 763,450 | 718,203 | ||||
Properties, net | 2,888,737 | 2,647,481 | ||||
Properties held-for-sale | 52,302 | |||||
Intangible assets | 153,948 | 183,092 | ||||
Investment in unconsolidated entities | 168,788 | 185,503 | ||||
Goodwill | 256,425 | 140,437 | ||||
Derivative assets | 59,807 | 33,898 | ||||
Accrued interest receivable | 52,911 | 47,747 | ||||
Other assets | 198,688 | 138,140 | ||||
VIE assets, at fair value | 48,034,610 | 51,045,874 | ||||
Total Assets | 62,921,479 | 62,941,289 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 214,902 | 185,117 | ||||
Related-party payable | 25,286 | 42,369 | ||||
Dividends payable | 132,549 | 125,916 | ||||
Derivative liabilities | 35,386 | 36,200 | ||||
Secured financing agreements, net | 8,586,687 | 5,773,056 | ||||
Unsecured senior notes, net | 2,024,570 | 2,125,235 | ||||
Secured borrowings on transferred loans, net | 74,148 | 74,185 | ||||
VIE liabilities, at fair value | 46,945,674 | 50,000,010 | ||||
Total Liabilities | 58,039,202 | 58,362,088 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,793 | 2,660 | ||||
Additional paid-in capital | 4,963,061 | 4,715,246 | ||||
Treasury stock | (104,194) | (92,104) | ||||
Accumulated other comprehensive income (loss) | 67,920 | $ 68,134 | 69,924 | $ 65,271 | $ 55,981 | $ 36,138 |
Retained earnings (accumulated deficit) | (308,343) | (217,312) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,621,237 | 4,478,414 | ||||
Non-controlling interests in consolidated subsidiaries | 261,040 | 100,787 | ||||
Total Equity | 4,882,277 | 4,579,201 | $ 4,539,734 | $ 4,560,073 | ||
Total Liabilities and Equity | 62,921,479 | 62,941,289 | ||||
Infrastructure Lending Segment | ||||||
Assets: | ||||||
Goodwill | 116,000 | |||||
LNR | ||||||
Assets: | ||||||
Goodwill | 140,400 | 140,400 | ||||
Operating Segments and Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 264,438 | 363,722 | ||||
Restricted cash | 124,264 | 48,825 | ||||
Loans held-for-investment, net | 8,500,674 | 6,562,495 | ||||
Loans held-for-sale | 1,326,837 | 745,743 | ||||
Loans transferred as secured borrowings | 74,281 | 74,403 | ||||
Investment securities | 1,810,876 | 1,718,155 | ||||
Properties, net | 2,888,737 | 2,647,481 | ||||
Properties held-for-sale | 52,302 | |||||
Intangible assets | 176,768 | 211,338 | ||||
Investment in unconsolidated entities | 190,248 | 206,491 | ||||
Goodwill | 256,425 | 140,437 | ||||
Derivative assets | 59,807 | 33,898 | ||||
Accrued interest receivable | 53,038 | 47,747 | ||||
Other assets | 198,695 | 141,008 | ||||
Total Assets | 15,977,390 | 12,941,743 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 214,776 | 183,906 | ||||
Related-party payable | 25,286 | 42,369 | ||||
Dividends payable | 132,549 | 125,916 | ||||
Derivative liabilities | 35,386 | 36,200 | ||||
Secured financing agreements, net | 8,610,387 | 5,796,756 | ||||
Unsecured senior notes, net | 2,024,570 | 2,125,235 | ||||
Secured borrowings on transferred loans, net | 74,148 | 74,185 | ||||
Total Liabilities | 11,117,102 | 8,384,567 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,793 | 2,660 | ||||
Additional paid-in capital | 4,963,061 | 4,715,246 | ||||
Treasury stock | (104,194) | (92,104) | ||||
Accumulated other comprehensive income (loss) | 67,920 | 69,924 | ||||
Retained earnings (accumulated deficit) | (308,343) | (217,312) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,621,237 | 4,478,414 | ||||
Non-controlling interests in consolidated subsidiaries | 239,051 | 78,762 | ||||
Total Equity | 4,860,288 | 4,557,176 | ||||
Total Liabilities and Equity | 15,977,390 | 12,941,743 | ||||
Operating segment | Real Estate Investment Lending | ||||||
Assets: | ||||||
Cash and cash equivalents | 15,217 | 14,580 | ||||
Restricted cash | 34,325 | 21,555 | ||||
Loans held-for-investment, net | 7,004,938 | 6,558,699 | ||||
Loans held-for-sale | 719,781 | 613,287 | ||||
Loans transferred as secured borrowings | 74,281 | 74,403 | ||||
Investment securities | 718,262 | 694,012 | ||||
Investment in unconsolidated entities | 34,334 | 45,028 | ||||
Derivative assets | 15,232 | 6,487 | ||||
Accrued interest receivable | 42,080 | 46,650 | ||||
Other assets | 38,604 | 5,648 | ||||
Total Assets | 8,697,054 | 8,080,349 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 23,681 | 23,054 | ||||
Related-party payable | 20 | |||||
Derivative liabilities | 3,015 | 20,386 | ||||
Secured financing agreements, net | 4,117,051 | 3,466,487 | ||||
Secured borrowings on transferred loans, net | 74,148 | 74,185 | ||||
Total Liabilities | 4,217,895 | 3,584,132 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 1,481,943 | 1,818,559 | ||||
Accumulated other comprehensive income (loss) | 60,811 | 57,914 | ||||
Retained earnings (accumulated deficit) | 2,926,015 | 2,609,050 | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,468,769 | 4,485,523 | ||||
Non-controlling interests in consolidated subsidiaries | 10,390 | 10,694 | ||||
Total Equity | 4,479,159 | 4,496,217 | ||||
Total Liabilities and Equity | 8,697,054 | 8,080,349 | ||||
Operating segment | Infrastructure Lending Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 8 | |||||
Restricted cash | 28,222 | |||||
Loans held-for-investment, net | 1,492,276 | |||||
Loans held-for-sale | 320,270 | |||||
Investment securities | 65,060 | |||||
Goodwill | 115,988 | |||||
Derivative assets | 481 | |||||
Accrued interest receivable | 6,356 | |||||
Other assets | 8,398 | |||||
Total Assets | 2,037,059 | |||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 10,889 | |||||
Derivative liabilities | 381 | |||||
Secured financing agreements, net | 1,507,073 | |||||
Total Liabilities | 1,518,343 | |||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 525,108 | |||||
Retained earnings (accumulated deficit) | (6,392) | |||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 518,716 | |||||
Total Equity | 518,716 | |||||
Total Liabilities and Equity | 2,037,059 | |||||
Operating segment | Property Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 23,496 | 10,388 | ||||
Restricted cash | 18,239 | 12,491 | ||||
Properties, net | 2,620,220 | 2,364,806 | ||||
Properties held-for-sale | 31,928 | |||||
Intangible assets | 96,348 | 116,081 | ||||
Investment in unconsolidated entities | 112,110 | 110,704 | ||||
Derivative assets | 41,461 | 26,775 | ||||
Accrued interest receivable | 269 | 68 | ||||
Other assets | 99,412 | 71,929 | ||||
Total Assets | 3,043,483 | 2,713,242 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 71,253 | 62,890 | ||||
Derivative liabilities | 2,276 | 13,063 | ||||
Secured financing agreements, net | 1,929,596 | 1,621,885 | ||||
Total Liabilities | 2,003,125 | 1,697,838 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 809,734 | 957,329 | ||||
Accumulated other comprehensive income (loss) | 7,171 | 12,076 | ||||
Retained earnings (accumulated deficit) | 5,775 | (14,335) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 822,680 | 955,070 | ||||
Non-controlling interests in consolidated subsidiaries | 217,678 | 60,334 | ||||
Total Equity | 1,040,358 | 1,015,404 | ||||
Total Liabilities and Equity | 3,043,483 | 2,713,242 | ||||
Operating segment | LNR | ||||||
Assets: | ||||||
Cash and cash equivalents | 39,446 | |||||
Restricted cash | 10,289 | |||||
Loans held-for-investment, net | 3,796 | |||||
Loans held-for-sale | 132,456 | |||||
Investment securities | 1,024,143 | |||||
Properties, net | 282,675 | |||||
Intangible assets | 95,257 | |||||
Investment in unconsolidated entities | 50,759 | |||||
Goodwill | 140,437 | |||||
Derivative assets | 636 | |||||
Accrued interest receivable | 243 | |||||
Other assets | 59,676 | |||||
Total Assets | 1,839,813 | |||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 74,426 | |||||
Related-party payable | 31 | |||||
Derivative liabilities | 85 | |||||
Secured financing agreements, net | 411,526 | |||||
Total Liabilities | 486,068 | |||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 659,062 | |||||
Accumulated other comprehensive income (loss) | (66) | |||||
Retained earnings (accumulated deficit) | 687,015 | |||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 1,346,011 | |||||
Non-controlling interests in consolidated subsidiaries | 7,734 | |||||
Total Equity | 1,353,745 | |||||
Total Liabilities and Equity | 1,839,813 | |||||
Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 180,946 | 299,308 | ||||
Restricted cash | 28,970 | 4,490 | ||||
Accrued interest receivable | 3,243 | 786 | ||||
Other assets | 2,399 | 3,755 | ||||
Total Assets | 215,558 | 308,339 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 28,600 | 23,536 | ||||
Related-party payable | 25,212 | 42,318 | ||||
Dividends payable | 132,549 | 125,916 | ||||
Derivative liabilities | 29,463 | 2,666 | ||||
Secured financing agreements, net | 297,655 | 296,858 | ||||
Unsecured senior notes, net | 2,024,570 | 2,125,235 | ||||
Total Liabilities | 2,538,049 | 2,616,529 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,793 | 2,660 | ||||
Additional paid-in capital | 1,876,231 | 1,280,296 | ||||
Treasury stock | (104,194) | (92,104) | ||||
Retained earnings (accumulated deficit) | (4,097,321) | (3,499,042) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | (2,322,491) | (2,308,190) | ||||
Total Equity | (2,322,491) | (2,308,190) | ||||
Total Liabilities and Equity | 215,558 | 308,339 | ||||
Corporate | LNR | ||||||
Assets: | ||||||
Cash and cash equivalents | 44,771 | |||||
Restricted cash | 14,508 | |||||
Loans held-for-investment, net | 3,460 | |||||
Loans held-for-sale | 286,786 | |||||
Investment securities | 1,027,554 | |||||
Properties, net | 268,517 | |||||
Properties held-for-sale | 20,374 | |||||
Intangible assets | 80,420 | |||||
Investment in unconsolidated entities | 43,804 | |||||
Goodwill | 140,437 | |||||
Derivative assets | 2,633 | |||||
Accrued interest receivable | 1,090 | |||||
Other assets | 49,882 | |||||
Total Assets | 1,984,236 | |||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 80,353 | |||||
Related-party payable | 74 | |||||
Derivative liabilities | 251 | |||||
Secured financing agreements, net | 759,012 | |||||
Total Liabilities | 839,690 | |||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 270,045 | |||||
Accumulated other comprehensive income (loss) | (62) | |||||
Retained earnings (accumulated deficit) | 863,580 | |||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 1,133,563 | |||||
Non-controlling interests in consolidated subsidiaries | 10,983 | |||||
Total Equity | 1,144,546 | |||||
Total Liabilities and Equity | 1,984,236 | |||||
LNR VIEs | ||||||
Assets: | ||||||
Cash and cash equivalents | 1,319 | 5,726 | ||||
Investment securities | (1,047,426) | (999,952) | ||||
Intangible assets | (22,820) | (28,246) | ||||
Investment in unconsolidated entities | (21,460) | (20,988) | ||||
Accrued interest receivable | (127) | |||||
Other assets | (7) | (2,868) | ||||
VIE assets, at fair value | 48,034,610 | 51,045,874 | ||||
Total Assets | 46,944,089 | 49,999,546 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 126 | 1,211 | ||||
Secured financing agreements, net | (23,700) | (23,700) | ||||
VIE liabilities, at fair value | 46,945,674 | 50,000,010 | ||||
Total Liabilities | 46,922,100 | 49,977,521 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Non-controlling interests in consolidated subsidiaries | 21,989 | 22,025 | ||||
Total Equity | 21,989 | 22,025 | ||||
Total Liabilities and Equity | $ 46,944,089 | $ 49,999,546 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands, shares in Millions | Nov. 09, 2018$ / shares | Oct. 15, 2018USD ($)property | Oct. 03, 2018USD ($) | Oct. 01, 2018USD ($)shares | Sep. 19, 2018USD ($) | Aug. 08, 2018$ / shares | May 04, 2018$ / shares | Feb. 28, 2018$ / shares | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017$ / shares | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares |
Subsequent Events | |||||||||||||
Payment of debt | $ 3,880,450 | $ 2,724,179 | |||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 | ||||||
Infrastructure Lending Term Loan | |||||||||||||
Subsequent Events | |||||||||||||
Maturity period | 3 years | ||||||||||||
2019 Notes | |||||||||||||
Subsequent Events | |||||||||||||
Value of shares issued to settle redemption | $ 235,500 | ||||||||||||
Shares issued to settle redemption | shares | 11.2 | ||||||||||||
Cash payments to settle redemptions | $ 20,800 | ||||||||||||
Aggregate principal amount | $ 263,400 | 263,400 | $ 263,400 | ||||||||||
Debt conversion original amount | $ 266,000 | ||||||||||||
Infrastructure Lending Segment | |||||||||||||
Subsequent Events | |||||||||||||
Purchase price | $ 2,011,428 | ||||||||||||
Subsequent event | |||||||||||||
Subsequent Events | |||||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | ||||||||||||
Subsequent event | Infrastructure Lending Term Loan | |||||||||||||
Subsequent Events | |||||||||||||
Payment of debt | $ 62,500 | ||||||||||||
Subsequent event | 2019 Notes | |||||||||||||
Subsequent Events | |||||||||||||
Value of shares issued to settle redemption | $ 27,900 | ||||||||||||
Shares issued to settle redemption | shares | 1.2 | ||||||||||||
Cash payments to settle redemptions | $ 4,700 | ||||||||||||
Subsequent event | Infrastructure Lending Segment | |||||||||||||
Subsequent Events | |||||||||||||
Number of properties in portfolio investment | property | 2 | ||||||||||||
Purchase price | $ 147,100 | ||||||||||||
Available financing used to fund acquisition | $ 120,400 |