Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 001-34436 | |
Entity Registrant Name | Starwood Property Trust, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 27-0247747 | |
Entity Address, Address Line One | 591 West Putnam Avenue | |
Entity Address, City or Town | Greenwich | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06830 | |
City Area Code | 203 | |
Local Phone Number | 422-7700 | |
Title of 12(b) Security | Common stock, $0.01 par value per share | |
Trading Symbol | STWD | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 284,687,634 | |
Entity Central Index Key | 0001465128 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and cash equivalents | $ 379,870 | $ 478,388 |
Restricted cash | 131,336 | 95,643 |
Loans held-for-investment, net of credit loss allowances of $109,747 and $33,415 ($256,407 and $671,572 held at fair value) | 10,918,652 | 10,586,074 |
Loans held-for-sale ($1,012,673 and $764,622 held at fair value) | 1,012,673 | 884,150 |
Investment securities, net of credit loss allowances of $6,425 and $0 ($203,816 and $239,600 held at fair value) | 745,113 | 810,238 |
Properties, net | 2,207,822 | 2,266,440 |
Intangible assets ($14,589 and $16,917 held at fair value) | 74,139 | 85,700 |
Investment in unconsolidated entities | 104,384 | 84,329 |
Goodwill | 259,846 | 259,846 |
Derivative assets | 64,825 | 28,943 |
Accrued interest receivable | 78,030 | 64,087 |
Other assets | 163,474 | 211,323 |
Total Assets | 80,617,639 | 78,042,336 |
Liabilities: | ||
Accounts payable, accrued expenses and other liabilities | 201,491 | 212,006 |
Related-party payable | 22,096 | 40,925 |
Dividends payable | 138,264 | 137,427 |
Derivative liabilities | 13,452 | 8,740 |
Secured financing agreements, net | 9,615,892 | 8,906,048 |
Collateralized loan obligations, net | 929,931 | 928,060 |
Unsecured senior notes, net | 1,934,555 | 1,928,622 |
Total Liabilities | 75,731,946 | 72,905,322 |
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, 291,787,327 issued and 284,681,766 outstanding as of September 30, 2020 and 287,380,891 issued and 282,200,751 outstanding as of December 31, 2019 | 2,918 | 2,874 |
Additional paid-in capital | 5,200,716 | 5,132,532 |
Treasury stock (7,105,561 shares and 5,180,140 shares) | (133,024) | (104,194) |
Accumulated other comprehensive income | 42,285 | 50,932 |
Accumulated deficit | (599,014) | (381,719) |
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,513,881 | 4,700,425 |
Non-controlling interests in consolidated subsidiaries | 371,812 | 436,589 |
Total Equity | 4,885,693 | 5,137,014 |
Total Liabilities and Equity | 80,617,639 | 78,042,336 |
Primary beneficiary | ||
Assets: | ||
Total Assets | 64,477,475 | 62,187,175 |
Liabilities: | ||
Total Liabilities | $ 62,876,265 | $ 60,743,494 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Loans held-for-investment, net, credit loss allowances | $ 109,747 | $ 33,611 |
Loans held-for-investment, net, held at fair value | 256,407 | 671,572 |
Loans-held-for-sale, held at fair value | 1,012,673 | 764,622 |
Investment securities, net, credit loss allowances | 6,425 | 0 |
Investment securities held at fair value | 203,817 | 239,600 |
Intangible assets held at fair value | $ 14,589 | $ 16,917 |
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 | 291,787,327 | 287,380,891 |
Common stock, shares outstanding | 284,681,766 | 282,200,751 |
Treasury stock, shares | 7,105,561 | 5,180,140 |
Total Assets | $ 80,617,639 | $ 78,042,336 |
Total Liabilities | 75,731,946 | 72,905,322 |
Total loans held-for-investment | ||
Loans held-for-investment, net, credit loss allowances | 109,747 | 33,415 |
Collateralized Loan Obligation | ||
Total Assets | 1,100,000 | 1,100,000 |
Total Liabilities | $ 900,000 | $ 900,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Interest income from loans | $ 169,404 | $ 172,030 | $ 557,934 | $ 546,912 |
Interest income from investment securities | 12,186 | 16,676 | 42,070 | 56,853 |
Servicing fees | 9,548 | 14,333 | 20,999 | 47,774 |
Rental income | 75,978 | 84,654 | 222,834 | 255,784 |
Other revenues | 311 | 637 | 1,756 | 2,668 |
Total revenues | 267,427 | 288,330 | 845,593 | 909,991 |
Costs and expenses: | ||||
Management fees | 23,127 | 30,238 | 86,970 | 76,227 |
Interest expense | 95,981 | 123,156 | 317,499 | 387,954 |
General and administrative | 39,478 | 39,766 | 110,857 | 112,274 |
Acquisition and investment pursuit costs | 884 | 163 | 3,383 | 579 |
Costs of rental operations | 29,522 | 31,568 | 87,368 | 91,874 |
Depreciation and amortization | 23,581 | 28,269 | 70,982 | 86,075 |
Credit loss provision, net | (3,587) | (39) | 55,284 | 3,242 |
Other expense | 172 | 123 | 662 | 1,777 |
Total costs and expenses | 209,158 | 253,244 | 733,005 | 760,002 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 58,585 | 61,767 | 64,353 | 164,761 |
Change in fair value of servicing rights | 634 | (625) | (2,328) | (2,308) |
Change in fair value of investment securities, net | (199) | 266 | 3,132 | 995 |
Change in fair value of mortgage loans, net | 61,384 | 32,521 | 79,700 | 65,678 |
Earnings (loss) from unconsolidated entities | 3,192 | 2,747 | 32,065 | (31,636) |
Gain on sale of investments and other assets, net | 21,157 | 6,768 | 28,157 | |
(Loss) gain on derivative financial instruments, net | (28,097) | 21,933 | (34,485) | 19,694 |
Foreign currency gain (loss), net | 25,452 | (15,664) | (1,861) | (17,134) |
Loss on extinguishment of debt | (4,624) | (2,377) | (10,738) | |
Other income (loss), net | 357 | (50) | 687 | (123) |
Total other income | 121,308 | 119,428 | 145,654 | 217,346 |
Income before income taxes | 179,577 | 154,514 | 258,242 | 367,335 |
Income tax provision | (14,843) | (4,513) | (6,816) | (8,380) |
Net income | 164,734 | 150,001 | 251,426 | 358,955 |
Net income attributable to non-controlling interests | (12,900) | (9,605) | (26,705) | (21,160) |
Net income attributable to Starwood Property Trust, Inc. | $ 151,834 | $ 140,396 | $ 224,721 | $ 337,795 |
Earnings per share data attributable to Starwood Property Trust, Inc.: | ||||
Basic (in dollars per share) | $ 0.53 | $ 0.50 | $ 0.79 | $ 1.20 |
Diluted (in dollars per share) | $ 0.52 | $ 0.49 | $ 0.79 | $ 1.19 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 164,734 | $ 150,001 | $ 251,426 | $ 358,955 |
Other comprehensive loss (net change by component): | ||||
Available-for-sale securities | (581) | (579) | (8,647) | (1,045) |
Foreign currency translation | (4,168) | (5,238) | ||
Other comprehensive loss | (581) | (4,747) | (8,647) | (6,283) |
Comprehensive income | 164,153 | 145,254 | 242,779 | 352,672 |
Less: Comprehensive income attributable to non-controlling interests | (12,900) | (9,605) | (26,705) | (21,160) |
Comprehensive income attributable to Starwood Property Trust, Inc. | $ 151,253 | $ 135,649 | $ 216,074 | $ 331,512 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity $ in Thousands | Total Starwood Property Trust, Inc. Stockholders' EquityCumulative Effect, Period of Adoption, AdjustmentUSD ($) | Total Starwood Property Trust, Inc. Stockholders' EquityUSD ($) | Common stockUSD ($)shares | Additional Paid-In CapitalUSD ($) | Treasury StockUSD ($)shares | Accumulated DeficitCumulative Effect, Period of Adoption, AdjustmentUSD ($) | Accumulated DeficitUSD ($) | Accumulated Other Comprehensive IncomeUSD ($) | Non-Controlling InterestsUSD ($) | Cumulative Effect, Period of Adoption, AdjustmentUSD ($) | USD ($)shares |
Balance at Dec. 31, 2018 | $ 4,603,432 | $ 2,808 | $ 4,995,156 | $ (104,194) | $ (348,998) | $ 58,660 | $ 296,757 | $ 4,900,189 | |||
Balance (in shares) at Dec. 31, 2018 | shares | 280,839,692 | 5,180,140 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Proceeds from DRIP Plan | 632 | 632 | 632 | ||||||||
Proceeds from DRIP Plan (in shares) | shares | 27,887 | ||||||||||
Redemption of Class A Units | 21,070 | $ 10 | 21,060 | (21,070) | 21,070 | ||||||
Redemption of Class A Units (in shares) | shares | 974,176 | ||||||||||
Equity offering costs | (27) | (27) | (27) | ||||||||
Conversion of 2019 Convertible Notes | 67,562 | $ 36 | 67,526 | 67,562 | |||||||
Conversion of 2019 Convertible Notes (Shares) | shares | 3,611,918 | ||||||||||
Share-based compensation | 26,364 | $ 12 | 26,352 | 26,364 | |||||||
Share-based compensation (in shares) | shares | 1,168,123 | ||||||||||
Manager fees paid in stock | 10,977 | $ 5 | 10,972 | 10,977 | |||||||
Manager fee paid in stock (in shares) | shares | 495,363 | ||||||||||
Net income | 337,795 | 337,795 | 21,160 | 358,955 | |||||||
Dividends declared | (406,326) | (406,326) | (406,326) | ||||||||
Other comprehensive loss, net | (6,283) | (6,283) | (6,283) | ||||||||
VIE non-controlling interests | (2,792) | (2,792) | |||||||||
Contributions from non-controlling interests | 5,294 | 5,294 | |||||||||
Distributions to non-controlling interests | (41,531) | (41,531) | |||||||||
Balance at Sep. 30, 2019 | 4,655,196 | $ 2,871 | 5,121,671 | $ (104,194) | (417,529) | 52,377 | 257,818 | 4,913,014 | |||
Balance (in shares) at Sep. 30, 2019 | shares | 287,117,159 | 5,180,140 | |||||||||
Balance at Jun. 30, 2019 | 4,637,707 | $ 2,864 | 5,103,771 | $ (104,194) | (421,858) | 57,124 | 265,544 | 4,903,251 | |||
Balance (in shares) at Jun. 30, 2019 | shares | 286,451,361 | 5,180,140 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Proceeds from DRIP Plan | 253 | 253 | 253 | ||||||||
Proceeds from DRIP Plan (in shares) | shares | 10,751 | ||||||||||
Redemption of Class A Units | 4,697 | $ 2 | 4,695 | (4,697) | |||||||
Redemption of Class A Units (in shares) | shares | 219,831 | ||||||||||
Equity offering costs | (19) | (19) | (19) | ||||||||
Share-based compensation | 12,976 | $ 5 | 12,971 | 12,976 | |||||||
Share-based compensation (in shares) | shares | 435,216 | ||||||||||
Net income | 140,396 | 140,396 | 9,605 | 150,001 | |||||||
Dividends declared | (136,067) | (136,067) | (136,067) | ||||||||
Other comprehensive loss, net | (4,747) | (4,747) | (4,747) | ||||||||
VIE non-controlling interests | (2,615) | (2,615) | |||||||||
Contributions from non-controlling interests | 658 | 658 | |||||||||
Distributions to non-controlling interests | (10,677) | (10,677) | |||||||||
Balance at Sep. 30, 2019 | 4,655,196 | $ 2,871 | 5,121,671 | $ (104,194) | (417,529) | 52,377 | 257,818 | 4,913,014 | |||
Balance (in shares) at Sep. 30, 2019 | shares | 287,117,159 | 5,180,140 | |||||||||
Balance at Dec. 31, 2019 | $ (32,286) | 4,700,425 | $ 2,874 | 5,132,532 | $ (104,194) | $ (32,286) | (381,719) | 50,932 | 436,589 | $ (32,286) | $ 5,137,014 |
Balance (in shares) at Dec. 31, 2019 | shares | 287,380,891 | 5,180,140 | 287,380,891 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Proceeds from DRIP Plan | 890 | $ 1 | 889 | $ 890 | |||||||
Proceeds from DRIP Plan (in shares) | shares | 59,340 | ||||||||||
Redemption of Class A Units | 8,956 | $ 4 | 8,952 | (10,241) | (1,285) | ||||||
Redemption of Class A Units (in shares) | 409,712 | ||||||||||
Redemption of Class A Units | 8,538 | ||||||||||
Equity offering costs | (69) | (69) | (69) | ||||||||
Common stock repurchased | (28,830) | $ (28,830) | $ (28,830) | ||||||||
Common stock repurchased (in shares) | shares | 1,925,421 | 1,925,421 | |||||||||
Share-based compensation | 22,405 | $ 15 | 22,390 | $ 22,405 | |||||||
Share-based compensation (in shares) | shares | 1,516,152 | ||||||||||
Manager fees paid in stock | 36,046 | $ 24 | 36,022 | 36,046 | |||||||
Manager fee paid in stock (in shares) | shares | 2,421,232 | ||||||||||
Net income | 224,721 | 224,721 | 26,705 | 251,426 | |||||||
Dividends declared | (409,730) | (409,730) | (409,730) | ||||||||
Other comprehensive loss, net | (8,647) | (8,647) | (8,647) | ||||||||
VIE non-controlling interests | (2,177) | (2,177) | |||||||||
Contributions from non-controlling interests | 9,657 | 9,657 | |||||||||
Distributions to non-controlling interests | (88,721) | (88,721) | |||||||||
Balance at Sep. 30, 2020 | 4,513,881 | $ 2,918 | 5,200,716 | $ (133,024) | (599,014) | 42,285 | 371,812 | $ 4,885,693 | |||
Balance (in shares) at Sep. 30, 2020 | shares | 291,787,327 | 7,105,561 | 291,787,327 | ||||||||
Balance at Jun. 30, 2020 | 4,492,237 | $ 2,916 | 5,193,572 | $ (133,024) | (614,093) | 42,866 | 372,559 | $ 4,864,796 | |||
Balance (in shares) at Jun. 30, 2020 | shares | 291,573,083 | 7,105,561 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Proceeds from DRIP Plan | 521 | $ 1 | 520 | 521 | |||||||
Proceeds from DRIP Plan (in shares) | shares | 34,309 | ||||||||||
Redemption of Class A Units | 418 | 418 | (1,703) | (1,285) | |||||||
Equity offering costs | (54) | (54) | (54) | ||||||||
Share-based compensation | 6,261 | $ 1 | 6,260 | 6,261 | |||||||
Share-based compensation (in shares) | shares | 179,935 | ||||||||||
Net income | 151,834 | 151,834 | 12,900 | 164,734 | |||||||
Dividends declared | (136,755) | (136,755) | (136,755) | ||||||||
Other comprehensive loss, net | (581) | (581) | (581) | ||||||||
VIE non-controlling interests | 12 | 12 | |||||||||
Contributions from non-controlling interests | 251 | 251 | |||||||||
Distributions to non-controlling interests | (12,207) | (12,207) | |||||||||
Balance at Sep. 30, 2020 | $ 4,513,881 | $ 2,918 | $ 5,200,716 | $ (133,024) | $ (599,014) | $ 42,285 | $ 371,812 | $ 4,885,693 | |||
Balance (in shares) at Sep. 30, 2020 | shares | 291,787,327 | 7,105,561 | 291,787,327 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | Sep. 16, 2020 | Jun. 16, 2020 | Feb. 25, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
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 | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Cash Flows from Operating Activities: | |||||
Net income | $ 164,734 | $ 150,001 | $ 251,426 | $ 358,955 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||
Amortization of deferred financing costs, premiums and discounts on secured borrowings | 29,996 | 25,942 | |||
Amortization of discounts and deferred financing costs on unsecured senior notes | 5,933 | 5,830 | |||
Accretion of net discount on investment securities | (9,362) | (10,338) | |||
Accretion of net deferred loan fees and discounts | (30,468) | (24,193) | |||
Share-based compensation | 22,405 | 26,364 | |||
Manager fees paid in stock | 36,046 | 10,977 | |||
Change in fair value of investment securities | 199 | (266) | (3,132) | (995) | |
Change in fair value of consolidated VIEs | 41,008 | (32,984) | |||
Change in fair value of servicing rights | 2,328 | 2,308 | |||
Change in fair value of loans | (61,384) | (32,521) | (79,700) | (65,678) | |
Change in fair value of derivatives | 41,146 | (16,043) | |||
Foreign currency loss, net | 1,861 | 17,134 | |||
Gain on sale of investments and other assets | (6,768) | (28,157) | |||
Impairment charges on properties and related intangibles | 1,392 | ||||
Credit loss provision, net | (3,587) | (39) | 55,284 | 3,242 | |
Depreciation and amortization | 70,626 | 86,172 | |||
(Earnings) loss from unconsolidated entities | (3,192) | (2,747) | (32,065) | 31,636 | |
Distributions of earnings from unconsolidated entities | 2,334 | 9,730 | |||
Loss on extinguishment of debt | 4,624 | 2,377 | 10,738 | ||
Origination and purchase of loans held-for-sale, net of principal collections | (1,725,341) | (2,549,697) | |||
Proceeds from sale of loans held-for-sale | 1,997,651 | 1,774,794 | |||
Changes in operating assets and liabilities: | |||||
Related-party payable, net | (18,829) | (19,557) | |||
Accrued and capitalized interest receivable, less purchased interest | (121,923) | (71,906) | |||
Other assets | 3,007 | (112,723) | |||
Accounts payable, accrued expenses and other liabilities | (9,691) | (2,734) | |||
Net cash provided by (used in) operating activities | 526,149 | (569,791) | |||
Cash Flows from Investing Activities: | |||||
Origination and purchase of loans held-for-investment | (2,368,931) | (2,987,685) | |||
Proceeds from principal collections on loans | 1,357,445 | 2,312,992 | |||
Proceeds from loans sold | 435,097 | 945,066 | |||
Purchase and funding of investment securities | (22,408) | (5,165) | |||
Proceeds from sales of investment securities | 7,940 | 3,978 | |||
Proceeds from principal collections on investment securities | 17,478 | 45,857 | 67,957 | 118,892 | |
Proceeds from sales of real estate | 23,805 | 52,336 | |||
Purchases and additions to properties and other assets | (17,923) | (22,977) | |||
Investment in unconsolidated entities | (3,133) | (8,365) | |||
Proceeds from sale of interest in unconsolidated entities | 10,313 | ||||
Distribution of capital from unconsolidated entities | 2,485 | 12,455 | |||
Payments for purchase or termination of derivatives | (76,270) | (36,360) | |||
Proceeds from termination of derivatives | 13,667 | 12,979 | |||
Net cash (used in) provided by investing activities | (569,956) | 398,146 | |||
Cash Flows from Financing Activities: | |||||
Proceeds from borrowings | 4,935,556 | 6,084,209 | |||
Principal repayments on and repurchases of borrowings | (4,221,999) | (5,549,756) | |||
Payment of deferred financing costs | (17,978) | (45,403) | |||
Proceeds from common stock issuances | 511 | 632 | |||
Payment of equity offering costs | (69) | (27) | |||
Payment of dividends | (408,893) | (402,519) | |||
Contributions from non-controlling interests | 9,657 | 5,294 | |||
Distributions to non-controlling interests | (90,006) | (41,531) | |||
Purchase of treasury stock | (28,830) | ||||
Issuance of debt of consolidated VIEs | 24,376 | 149,949 | |||
Repayment of debt of consolidated VIEs | (279,419) | (158,315) | |||
Distributions of cash from consolidated VIEs | 57,174 | 38,607 | |||
Net cash (used in) provided by financing activities | (19,920) | 81,140 | |||
Net decrease in cash, cash equivalents and restricted cash | (63,727) | (90,505) | |||
Cash, cash equivalents and restricted cash, beginning of period | 574,031 | 487,865 | $ 487,865 | ||
Effect of exchange rate changes on cash | 902 | (2,702) | |||
Cash, cash equivalents and restricted cash, end of period | 511,206 | 394,658 | 511,206 | 394,658 | $ 574,031 |
Supplemental disclosure of cash flow information: | |||||
Cash paid for interest | 284,855 | 367,291 | |||
Income taxes paid | 2,261 | 8,848 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||
Dividends declared, but not yet paid | 138,737 | $ 136,533 | 138,737 | 136,533 | |
Consolidation of VIEs (VIE asset/liability additions) | 3,589,657 | 6,103,915 | |||
Deconsolidation of VIEs (VIE asset/liability reductions) | 7,652 | 341,186 | |||
Reclassification of residential loans held-for-investment to held-for-sale | 449,025 | ||||
Reclassification of residential and infrastructure loans held-for-sale to held-for-investment | 104,327 | 340,948 | |||
Loan principal collections temporarily held at master servicer | 9,911 | ||||
Redemption of Class A Units | $ (1,285) | 8,538 | 21,070 | ||
Unsettled common stock issuances | $ 379 | ||||
Settlement of 2019 Convertible Notes in shares | 75,525 | ||||
Settlement of loans transferred as secured borrowings | 74,692 | ||||
Net assets acquired through foreclosure | 27,416 | ||||
Lease liabilities arising from obtaining right-of-use assets | 9,626 | ||||
Net assets acquired from consolidated VIEs | $ 8,613 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2020 | |
Business and Organization | |
Business and Organization | 1. Business and Organizatio n Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering. We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in both the United States (“U.S.”) and Europe. 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, 2020 and we refer to the investments within these segments as our target assets: ● Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans). Our residential mortgage loans are secured by a first mortgage lien on residential property and consist of non-agency residential mortgage loans that are not guaranteed by any U.S. Government agency or federally chartered corporation. ● Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments. ● Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment. ● 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 by Mr. Sternlicht. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
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, 2019 (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, 2020 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, 2019 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, we have financed a pool of our loans through a collateralized loan obligation (“CLO”) which is considered a VIE. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership 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 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 non-performance 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 1% of our consolidated securitization VIE assets, with the remaining 99 % 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 We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. 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 residential mortgage loans held-for-investment were made in order to maintain consistency across all our residential mortgage loans. 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. 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 credit deteriorated or we have elected to apply the fair value option at purchase. 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. Credit Losses Loans and Debt Securities Measured at Amortized Cost ASC 326, Financial Instruments – Credit Losses , became effective for the Company on January 1, 2020. ASC 326 mandates the use of a current expected credit loss model (“CECL”) for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under GAAP. The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to our loans held-for-investment (“HFI”) and our held-to-maturity (“HTM”) debt securities which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities. However, as permitted by ASC 326, we have elected not to measure an allowance for credit losses on accrued interest receivable (which is classified separately on our condensed consolidated balance sheet), but rather write off in a timely manner by reversing interest income and/or cease accruing interest that would likely be uncollectible. Our adoption of the CECL model resulted in a As we do not have a history of realized credit losses on our HFI loans and HTM securities, we have subscribed to third party database services to provide us with historical industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios. See Note 4 for further discussion of our methodologies. We also evaluate each loan and security measured at amortized cost for credit deterioration at least quarterly. Credit deterioration 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 or security. If a loan or security is considered to be credit deteriorated, we depart from the industry loss rate approach described above and determine the credit loss allowance as any excess of the amortized cost basis of the loan or security over (i) the present value of expected future cash flows discounted at the contractual effective interest rate or (ii) the fair value of the collateral, if repayment is expected solely from the collateral. Available-for-Sale Debt Securities Separate provisions of ASC 326 apply to our available-for-sale (“AFS”) debt securities, which are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (“AOCI”). We are required to establish an initial credit loss allowance for those securities that are purchased with credit deterioration (“PCD”) by grossing up the amortized cost basis of each security and providing an offsetting credit loss allowance for the difference between expected cash flows and contractual cash flows, both on a present value basis. As of the January 1, 2020 effective date, no such credit loss allowance gross-up was required on our AFS debt securities with PCD due to their individual unrealized gain positions as of that date. Subsequently, cumulative adverse changes in expected cash flows on our AFS debt securities are recognized currently as an increase to the allowance for credit losses. However, the allowance is limited to the amount by which the AFS debt security’s amortized cost exceeds its fair value. Favorable changes in expected cash flows are first recognized as a decrease to the allowance for credit losses (recognized currently in earnings). Such changes would be recognized as a prospective yield adjustment only when the allowance for credit losses is reduced to zero. A change in expected cash flows that is attributable solely to a change in a variable interest reference rate does not result in a credit loss and is accounted for as a prospective yield adjustment. Goodwill ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment Revenue Recognition Interest Income 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. Such excess, if any, is recognized as interest income on a level-yield basis over the life of the loan. Servicing Fees We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met. Rental Income Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor. 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 (the “Convertible 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, 2020 and 2019, 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. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our investments, which has a significant impact on the amount of income 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. In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 200 countries and territories, including every state in the U.S and in cities and regions where our corporate headquarters and/or properties that secure our investments, or properties that we own, are located, and is continuing to spread. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and since then, numerous countries, including the U.S., have declared national emergencies with respect to COVID-19 and have instituted “stay-at-home” guidelines or orders to help prevent its spread. Such actions are creating disruption in global supply chains, increasing rates of unemployment and adversely impacting many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2020. However, uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and our business in particular, makes any estimates and assumptions as of September 30, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates. Recent Accounting Developments Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting, On August 5, 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40), removes certain separation models for convertible debt instruments and convertible preferred stock that require the separation into a debt component and an equity or derivative component. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives and the convertible instruments are not issued with substantial premiums accounted for as paid-in capital. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. ASU 2020-06 also revises the derivative scope exception for contracts in an entity’s own equity and improves the consistency of EPS calculations. This ASU is effective for larger public business entities’ annual periods, and interim periods therein, beginning after December 15, 2021. Early application is permitted for fiscal years beginning after December 15, 2020. We expect to early adopt this ASU effective January 1, 2021 through the modified retrospective method of transition, resulting in a cumulative adjustment to our beginning accumulated deficit as of that date related to our outstanding Convertible Notes. We do not expect the application of this ASU, including the cumulative adjustment upon adoption, to materially impact our consolidated financial statements. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2020 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | 3. Acquisitions and Divestitures Investing and Servicing Segment Property Portfolio During the nine months ended September 30, 2020, we sold a property within the Investing and Servicing Segment for $24.1 million. In connection with this sale, we recognized a gain of $7.4 million within gain on sale of investments and other assets in our condensed consolidated statement of operations. There were no significant sales of properties during the three months ended September 30, 2020. During the three and nine months ended September 30, 2019, we sold a property within the Investing and Servicing Segment for $51.5 million. In connection with this sale, we recognized a gain of $20.7 million within gain on sale of investments and other assets in our condensed consolidated statements of operations, of which $4.0 million was attributable to non-controlling interests. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2020 | |
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 for either. The following tables summarize our investments in mortgages and loans as of September 30, 2020 and December 31, 2019 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) September 30, 2020 Value Amount Coupon (1) (years)(2) Loans held-for-investment: Commercial loans: First mortgages (3) $ 8,525,273 $ 8,548,916 5.3 % 1.6 Subordinated mortgages (4) 69,835 70,979 8.8 % 3.0 Mezzanine loans (3) 588,116 587,223 10.3 % 1.6 Other 30,548 34,043 8.9 % 2.0 Total commercial loans 9,213,772 9,241,161 Infrastructure first priority loans (6) 1,558,220 1,578,030 4.2 % 4.3 Residential mortgage loans, fair value option (5) 256,407 249,323 6.2 % 3.4 Total loans held-for-investment 11,028,399 11,068,514 Loans held-for-sale: Residential, fair value option (5) 747,654 742,106 6.0 % 3.4 Commercial, fair value option 265,019 266,370 4.1 % 10.0 Total loans held-for-sale 1,012,673 1,008,476 Total gross loans 12,041,072 $ 12,076,990 Credit loss allowances: Commercial loans held-for-investment (95,595) Infrastructure loans held-for-investment (14,152) Total allowances (109,747) Total net loans $ 11,931,325 December 31, 2019 Loans held-for-investment: Commercial loans: First mortgages (3) $ 7,928,026 $ 7,962,788 5.8 % 2.0 Subordinated mortgages (4) 75,724 77,055 8.8 % 3.4 Mezzanine loans (3) 484,164 484,408 11.0 % 1.9 Other 62,555 66,525 8.2 % 1.6 Total commercial loans 8,550,469 8,590,776 Infrastructure first priority loans 1,397,448 1,416,164 5.6 % 4.9 Residential mortgage loans, fair value option 671,572 654,925 6.1 % 3.8 Total loans held-for-investment 10,619,489 10,661,865 Loans held-for-sale: Residential, fair value option 605,384 587,144 6.2 % 3.9 Commercial, fair value option 159,238 160,635 3.9 % 10.0 Infrastructure, lower of cost or fair value 119,724 121,271 3.3 % 2.1 Total loans held-for-sale 884,346 869,050 Total gross loans 11,503,835 $ 11,530,915 Credit loss allowances: Commercial loans held-for-investment (33,415) Infrastructure loans held-for-investment — Total held-for-investment allowances (33,415) Infrastructure loans held-for-sale with a fair value allowance (196) Total allowances (33,611) Total net loans $ 11,470,224 (1) Calculated using LIBOR or other applicable index rates as of September 30, 2020 and December 31, 2019 for variable rate loans. (2) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition. (3) 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 $896.8 million and $967.0 million being classified as first mortgages as of September 30, 2020 and December 31, 2019, respectively. (4) 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. (5) During the nine months ended September 30, 2020, $422.7 million of residential loans held-for-investment were reclassified into loans held-for-sale. (6) During the nine months ended September 30, 2020, $104.3 million of infrastructure loans held-for-sale were reclassified into loans held-for-investment and $26.3 million of infrastructure loans held-for-investment were reclassified into loans held-for-sale. As of September 30, 2020, our variable rate loans held-for-investment were as follows (dollars in thousands): Carrying Weighted-average September 30, 2020 Value Spread Above Index Commercial loans $ 8,568,112 4.2 % Infrastructure loans 1,558,220 3.8 % Total variable rate loans held-for-investment $ 10,126,332 4.1 % Credit Loss Allowances As discussed in Note 2, we do not have a history of realized credit losses on our HFI loans and HTM securities, so we have subscribed to third party database services to provide us with industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios. For our commercial loans, we utilize a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading CMBS data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. We provide specific loan-level inputs which include loan-to-stabilized-value (LTV) and debt service coverage ratio (DSCR) metrics, as well as principal balances, property type, location, coupon, origination year, term, subordination, expected repayment dates and future fundings. We also select from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. We categorize the results by LTV range, which we consider the most significant indicator of credit quality for our commercial loans, as set forth in the credit quality indicator table below. A lower LTV ratio typically indicates a lower credit loss risk. During the three months ended September 30, 2020, each of the macroeconomic forecasts in our model indicated a substantial macroeconomic recovery from the three months ended June 30, 2020, with growth expected to continue into the next five years . These macroeconomic forecasts do not differentiate among property types or asset classes. Instead, these forecasts reference general macroeconomic growth factors which apply broadly across all assets. However, the COVID-19 pandemic has had a more negative impact on certain property types, principally retail and hospitality, which have withstood extended government mandated closures, and more recently office, which is experiencing lower demand due to remote working arrangements. The broad macroeconomic forecasts do not account for such differentiation. Accordingly, we have selected a more adverse macroeconomic recovery forecast related to these property types in determining our credit loss allowance. For our infrastructure loans, we utilize a database of historical infrastructure loan performance that is shared among a consortium of banks and other lenders and compiled by a major bond credit rating agency. The database is representative of industry-wide project finance activity dating back to 1983. We derive historical loss rates from the database filtered by industry, sub-industry, term and construction status for each of our infrastructure loans. Those historical loss rates reflect global economic cycles over a long period of time as well as average recovery rates. However, due to limited information in the first 20 years covered by the database, we have further applied a recessionary multiplier to those historical loss rates as of September 30, 2020. For the first six months of 2020, the multiplier was determined with reference to the 2008 financial crisis, where the magnitude of economic distress within infrastructure lending seemed to correlate to the economic deterioration caused by the COVID-19 pandemic. During the three months ended September 30, 2020, the stronger market liquidity and deal flow experienced within infrastructure lending seemed to correlate to 2011, when this market began emerging from the 2008 crisis. As such, the multiplier for this period was determined with reference to 2011. We categorize the results between the power and oil and gas industries, which we consider the most significant indicator of credit quality for our infrastructure loans, as set forth in the credit quality indicator table below. As discussed in Note 2, we use a discounted cash flow or collateral value approach, rather than the industry loan loss approach described above, to determine credit loss allowances for any credit deteriorated loans. 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 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. The significant credit quality indicators for our loans measured at amortized cost, which excludes loans held-for-sale, were as follows as of September 30, 2020 (dollars in thousands): Term Loans Revolving Loans Total Credit Amortized Cost Basis by Origination Year Amortized Cost Amortized Loss As of September 30, 2020 2020 2019 2018 2017 2016 Prior Total Cost Basis Allowance Commercial loans: Credit quality indicator: LTV < 60% $ 618,232 $ 1,084,103 $ 977,021 $ 1,031,872 $ 154,198 $ 215,747 $ — $ 4,081,173 $ 11,751 LTV 60% - 70% 138,058 1,469,532 1,653,299 35,931 53,450 191,211 — 3,541,481 35,691 LTV > 70% 384,045 582,334 243,452 140,914 — 75,250 — 1,425,995 18,300 Credit deteriorated — — 28,986 7,755 — 105,589 — 142,330 29,853 Defeased and other — — — — — 22,793 — 22,793 — Total commercial $ 1,140,335 $ 3,135,969 $ 2,902,758 $ 1,216,472 $ 207,648 $ 610,590 $ — $ 9,213,772 $ 95,595 Infrastructure loans: Credit quality indicator: Power $ — $ 246,675 $ 300,909 $ 148,159 $ 188,331 $ 312,176 $ 23,413 $ 1,219,663 $ 7,692 Oil and gas — 234,119 102,822 — — — 1,616 338,557 6,460 Total infrastructure $ — $ 480,794 $ 403,731 $ 148,159 $ 188,331 $ 312,176 $ 25,029 $ 1,558,220 $ 14,152 Residential loans held-for-investment, fair value option 256,407 — Loans held-for-sale 1,012,673 — Total gross loans $ 12,041,072 $ 109,747 As of September 30, 2020, we had credit deteriorated commercial loans with an amortized cost basis of $142.3 million. These loans were on nonaccrual status, with the cost recovery method of interest income recognition applied. In addition to $113.4 million of these loans, we had a $173.3 million commercial loan and $13.4 million of residential loans that were 90 days or greater past due at September 30, 2020. Any loans which are modified to provide for the deferral of interest are not considered past due and are accounted for in accordance with our revenue recognition policy on interest income. The following tables present the activity in our credit loss allowance for funded loans and unfunded commitments (amounts in thousands): Funded Commitments Credit Loss Allowance Loans Loans Held-for-Investment Held-for-Sale Total Nine Months Ended September 30, 2020 Commercial Infrastructure Infrastructure Funded Loans Credit loss allowance at December 31, 2019 $ 33,415 $ — $ 196 $ 33,611 Cumulative effect of ASC 326 effective January 1, 2020 10,112 10,328 — 20,440 Credit loss provision (reversal), net 53,110 3,824 (125) 56,809 Charge-offs (1,042) — (71) (1,113) Recoveries — — — — Credit loss allowance at September 30, 2020 $ 95,595 $ 14,152 $ — $ 109,747 Unfunded Commitments Credit Loss Allowance (1) Loans Held-for-Investment HTM Preferred Nine Months Ended September 30, 2020 Commercial Infrastructure Interests (2) Total Credit loss allowance at December 31, 2019 $ — $ — $ — $ — Cumulative effect of ASC 326 effective January 1, 2020 8,348 2,205 — 10,553 Credit loss reversal, net (3,156) (664) — (3,820) Credit loss allowance at September 30, 2020 $ 5,192 $ 1,541 $ — $ 6,733 Memo: Unfunded commitments as of September 30, 2020 (3) $ 1,630,823 $ 95,421 $ — $ 1,726,244 (1) Included in accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheet. (2) See Note 5 for further details. (3) Represents amounts expected to be funded (see Note 21). Loan Portfolio Activity The activity in our loan portfolio was as follows (amounts in thousands): Held-for-Investment Loans Nine Months Ended September 30, 2020 Commercial Infrastructure Residential Held-for-Sale Loans Total Loans Balance at December 31, 2019 $ 8,517,054 $ 1,397,448 $ 671,572 $ 884,150 $ 11,470,224 Cumulative effect of ASC 326 effective January 1, 2020 (10,112) (10,328) — — (20,440) Acquisitions/originations/additional funding 2,090,964 177,247 100,720 1,800,018 4,168,949 Capitalized interest (1) 105,329 48 — — 105,377 Basis of loans sold (2) (397,038) — (604) (2,035,770) (2,433,412) Loan maturities/principal repayments (1,148,317) (96,150) (76,025) (75,632) (1,396,124) Discount accretion/premium amortization 28,686 1,672 — 110 30,468 Changes in fair value — — (16,565) 96,265 79,700 Unrealized foreign currency translation loss (15,279) (38) — (1,291) (16,608) Credit loss (provision) reversal, net (53,110) (3,824) — 125 (56,809) Transfer to/from other asset classifications — 77,993 (422,691) 344,698 — Balance at September 30, 2020 $ 9,118,177 $ 1,544,068 $ 256,407 $ 1,012,673 $ 11,931,325 Loans Transferred Held-for-Investment Loans As Secured Nine Months Ended September 30, 2019 Commercial Infrastructure Held-for-Sale Loans Borrowings Total Loans Balance at December 31, 2018 $ 7,075,577 $ 1,456,779 $ 1,187,552 $ 74,346 $ 9,794,254 Acquisitions/originations/additional funding 2,489,120 387,599 2,731,110 — 5,607,829 Capitalized interest (1) 79,869 — — — 79,869 Basis of loans sold (2) (548,329) — (2,164,908) — (2,713,237) Loan maturities/principal repayments (1,695,388) (563,736) (95,262) (74,692) (2,429,078) Discount accretion/premium amortization 22,674 1,173 — 346 24,193 Changes in fair value 1,496 — 64,182 — 65,678 Unrealized foreign currency translation (loss) gain (37,473) — 282 — (37,191) Credit loss provision, net (2,046) — (1,196) — (3,242) Loan foreclosures (27,303) — — — (27,303) Transfer to/from other asset classifications 279,641 — (279,641) — — Balance at September 30, 2019 $ 7,637,838 $ 1,281,815 $ 1,442,119 $ — $ 10,361,772 (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, 2020 | |
Investment Securities | |
Investment Securities | 5. Investment Securities Investment securities were comprised of the following as of September 30, 2020 and December 31, 2019 (amounts in thousands): Carrying Value as of September 30, 2020 December 31, 2019 RMBS, available-for-sale $ 170,270 $ 189,576 RMBS, fair value option (1) 373,682 147,034 CMBS, fair value option (1), (2) 1,194,191 1,295,363 HTM debt securities, amortized cost net of credit loss allowance of $6,425 and $0 541,296 570,638 Equity security, fair value 10,058 12,664 Subtotal — 2,289,497 2,215,275 VIE eliminations (1) (1,544,384) (1,405,037) Total investment securities $ 745,113 $ 810,238 (1) Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810. (2) Includes $178.6 million and $186.6 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of September 30, 2020 and December 31, 2019, respectively. Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands): RMBS, RMBS, fair CMBS, fair HTM Securitization available-for-sale value option value option Securities VIEs (1) Total Three Months Ended September 30, 2020 Purchases/fundings $ — $ 43,083 $ — $ 6,288 $ (43,083) $ 6,288 Principal collections 6,063 12,132 8,265 11,203 (20,185) 17,478 Three Months Ended September 30, 2019 Purchases $ — $ 52,845 $ 10,214 $ — $ (57,894) $ 5,165 Sales — — 49,725 — (49,725) — Principal collections 7,445 4,680 15,859 35,069 (17,196) 45,857 RMBS, RMBS, fair CMBS, fair HTM Securitization available-for-sale value option value option Securities VIEs (1) Total Nine Months Ended September 30, 2020 Purchases/fundings $ — $ 257,808 $ 7,661 $ 22,408 $ (265,469) $ 22,408 Sales — — 32,316 — (24,376) 7,940 Principal collections 18,626 32,236 25,715 48,554 (57,174) 67,957 Nine Months Ended September 30, 2019 Purchases $ — $ 79,117 $ 62,427 $ — $ (136,379) $ 5,165 Sales — 41,501 112,426 — (149,949) 3,978 Principal collections 20,222 9,772 37,768 89,737 (38,607) 118,892 (1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as issuance or repayment of debt of, or distributions from, consolidated VIEs in our condensed consolidated statements of cash flows. RMBS, Available-for-Sale The Company classified all of its RMBS not eliminated in consolidation as available-for-sale as of September 30, 2020 and December 31, 2019. These RMBS are reported at fair value in the balance sheet with changes in fair value recorded in accumulated other comprehensive income (“AOCI”). The tables below summarize various attributes of our investments in available-for-sale RMBS as of September 30, 2020 and December 31, 2019 (amounts in thousands): Unrealized Gains or (Losses) Recognized in AOCI Credit Gross Gross Net Amortized Loss Net Unrealized Unrealized Fair Value Cost Allowance Basis Gains Losses Adjustment Fair Value September 30, 2020 RMBS $ 127,921 $ — $ 127,921 $ 42,523 $ (174) $ 42,349 $ 170,270 December 31, 2019 RMBS $ 138,580 N/A $ 138,580 $ 51,310 $ (314) $ 50,996 $ 189,576 Weighted Average Coupon (1) Weighted Average WAL September 30, 2020 RMBS 1.5 % B+ 5.7 December 31, 2019 RMBS 3.1 % BB- 5.6 (1) Calculated using the September 30, 2020 and December 31, 2019 one-month LIBOR rate of 0.1483% and 1.763%, 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, 2020, approximately $144.5 million, or 84.9%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.26%. As of December 31, 2019, approximately $160.9 million, or 84.9%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.24%. We purchased all of the RMBS at a discount, a portion of which is accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount. We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $0.3 million for both the three months ended September 30, 2020 and 2019, respectively, and $1.0 million and $1.1 million for the nine months ended September 30, 2020 and 2019, respectively, 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, 2020 and December 31, 2019, and for which an allowance for credit losses has not been recorded (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, 2020 RMBS $ 412 $ 1,194 $ (45) $ (129) As of December 31, 2019 RMBS $ — $ 1,380 $ — $ (314) As of September 30, 2020 and December 31, 2019, there were two securities and one security, respectively, with unrealized losses reflected in the table above. After evaluating the securities and recording adjustments for credit losses, 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 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 net amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or credit losses 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, 2020, 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 $1.2 billion and $2.7 billion, respectively. As of September 30, 2020, 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 $373.7 million and $275.8 million, respectively. The $1.6 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 $23.5 million at September 30, 2020) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option investment securities. As of September 30, 2020, $96.9 million of our CMBS were variable rate and none of our RMBS were variable rate. HTM Debt Securities, Amortized Cost The table below summarizes our investments in HTM debt securities as of September 30, 2020 and December 31, 2019 (amounts in thousands): Amortized Credit Loss Net Carrying Gross Unrealized Gross Unrealized Cost Basis Allowance Amount Holding Gains Holding Losses Fair Value September 30, 2020 CMBS $ 338,984 $ — $ 338,984 $ — $ (23,277) $ 315,707 Preferred interests 165,952 (3,453) 162,499 — (5,550) 156,949 Infrastructure bonds 42,785 (2,972) 39,813 352 (13) 40,152 Total $ 547,721 $ (6,425) $ 541,296 $ 352 $ (28,840) $ 512,808 December 31, 2019 CMBS $ 383,473 $ — $ 383,473 $ 946 $ (3,001) $ 381,418 Preferred interests 142,012 — 142,012 1,148 (353) 142,807 Infrastructure bonds 45,153 — 45,153 — (651) 44,502 Total $ 570,638 $ — $ 570,638 $ 2,094 $ (4,005) $ 568,727 The following table presents the activity in our credit loss allowance for HTM debt securities (amounts in thousands): Total HTM Preferred Infrastructure Credit Loss Interests Bonds Allowance Nine Months Ended September 30, 2020 Credit loss allowance at December 31, 2019 $ — $ — $ — Cumulative effect of ASC 326 effective January 1, 2020: Beginning accumulated deficit charge 1,114 179 1,293 Gross-up of PCD bond amortized cost basis — 2,837 2,837 Credit loss provision, net 2,339 (44) 2,295 Credit loss allowance at September 30, 2020 $ 3,453 $ 2,972 $ 6,425 The table below summarizes the maturities of our HTM debt securities by type as of September 30, 2020 (amounts in thousands): Preferred Infrastructure CMBS Interests Bonds Total Less than one year $ 268,084 $ — $ 2,632 $ 270,716 One to three years 70,900 141,000 — 211,900 Three to five years — 21,499 — 21,499 Thereafter — — 37,181 37,181 Total $ 338,984 $ 162,499 $ 39,813 $ 541,296 Equity Security, Fair Value Option During 2012, we acquired 9,140,000 ordinary shares from a related-party in Starwood European Real Estate Finance Limited (“SEREF”), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. The fair value of the investment remeasured in USD was $10.1 million and $12.7 million as of September 30, 2020 and December 31, 2019, respectively. As of September 30, 2020, our shares represent an approximate 2% interest in SEREF. |
Properties
Properties | 9 Months Ended |
Sep. 30, 2020 | |
Properties | |
Properties | 6. Propertie s Our properties are held within the following portfolios: 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 $634.0 million and debt of $572.2 million as of September 30, 2020. 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. We acquired eight of the 27 affordable housing communities in December 2017, with the final 19 communities acquired during the year ended December 31, 2018. The Woodstar II Portfolio includes total gross properties and lease intangibles of $607.7 million and debt of $437.0 million as of September 30, 2020. 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 $760.1 million and debt of $591.9 million as of September 30, 2020. Master Lease Portfolio The Master Lease Portfolio is comprised of 16 retail properties geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Florida, Texas and Minnesota. These properties, which we acquired in September 2017, collectively comprise 1.9 million square feet and were leased back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. The Master Lease Portfolio includes total gross properties of $343.8 million and debt of $192.6 million as of September 30, 2020. Investing and Servicing Segment Property Portfolio The Investing and Servicing Segment Property Portfolio (“REIS Equity Portfolio”) is comprised of 15 commercial real estate properties and one equity interest in an unconsolidated commercial real estate property which were acquired from CMBS trusts during the previous five years. The REIS Equity Portfolio includes total gross properties and lease intangibles of $266.5 million and debt of $169.2 million as of September 30, 2020. The table below summarizes our properties held as of September 30, 2020 and December 31, 2019 (dollars in thousands): Depreciable Life September 30, 2020 December 31, 2019 Property Segment Land and land improvements 0 – 15 years $ 484,722 $ 484,397 Buildings and building improvements 5 – 45 years 1,689,004 1,687,756 Furniture & fixtures 3 – 7 years 57,894 52,567 Investing and Servicing Segment Land and land improvements 0 – 15 years 50,789 54,052 Buildings and building improvements 3 – 40 years 175,676 182,048 Furniture & fixtures 2 – 5 years 2,513 2,139 Commercial and Residential Lending Segment (1) Land and land improvements 0 – 10 years 11,416 11,386 Buildings and building improvements 10 – 23 years 17,424 16,285 Properties, cost 2,489,438 2,490,630 Less: accumulated depreciation (281,616) (224,190) Properties, net $ 2,207,822 $ 2,266,440 (1) Represents properties acquired through loan foreclosure. During the nine months ended September 30, 2020, we sold an operating property million was attributable to non-controlling interests. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 9 Months Ended |
Sep. 30, 2020 | |
Investment in Unconsolidated Entities | |
Investment in Unconsolidated Entities | 7. Investment in Unconsolidated Entities The table below summarizes our investments in unconsolidated entities as of September 30, 2020 and December 31, 2019 (dollars in thousands): Participation / Carrying value as of Ownership % (1) September 30, 2020 December 31, 2019 Equity method: Retail Fund 33% $ — $ — Equity interest in a natural gas power plant 10% 24,664 25,862 Investor entity which owns equity in an online real estate company 50% 9,382 9,473 Equity interests in commercial real estate 50% 1,742 1,907 Equity interest in and advances to a residential mortgage originator (2) N/A 14,139 12,002 Various 25% - 50% 8,595 8,339 58,522 57,583 Other: Equity interest in a servicing and advisory business (3) 2% 17,584 — Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% 7,659 9,225 Various 0% - 2% 20,619 17,521 45,862 26,746 $ 104,384 $ 84,329 (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) Includes a $4.5 million subordinated loan as of both September 30, 2020 and December 31, 2019. (3) During the year ended December 31, 2019, we received a capital distribution of $8.4 million and our equity interest was reduced to 4% and the carrying value was reduced to zero. During April 2020, we sold 37% of our equity interest for $10.3 million in cash, reducing our interest to 2 %. In connection with the sale, we recognized a gain of $10.3 million. Because the sale represented an observable price change in an orderly transaction, we also increased the value of our remaining investment to reflect its implied fair value. In doing so, we recognized a gain of $17.6 million. These amounts were recognized within earnings (loss) from unconsolidated entities in our condensed consolidated statement of operations during the nine months ended September 30, 2020. We own a 33% equity interest in a fund that owns four regional shopping malls (the “Retail Fund”). The fund is an investment company which measures its assets at fair value on a recurring basis. We report our interest in the Retail Fund on a three-month lag basis at its liquidation value. As of December 31, 2019, we impaired the remainder of our investment based on our estimate of unrealized decreases in the fair value of the underlying real estate properties. Such decreases were recognized by the Retail Fund during the period included in the nine months ended September 30, 2020. As of September 30, 2020, 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, 2020. During the three and nine months ended September 30, 2020, we did not become aware of (i) any observable price changes in our other investments accounted for under the fair value practicability exception, except as described above with respect to the servicing and advisory business, or (ii) any indicators of impairment. |
Goodwill and Intangibles
Goodwill and Intangibles | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangibles | |
Goodwill and Intangibles | 8. Goodwil l and Intangibles Goodwill Goodwill is tested for impairment annually in the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Management considered the general economic decline and the impact of the COVID-19 pandemic, but did not identify any such event or circumstances. However, future changes in the expectations of the impact of COVID-19 on our operations, financial performance and cash flows could cause our goodwill to be impaired. Infrastructure Lending Segment The Infrastructure Lending Segment’s goodwill of $119.4 million at both September 30, 2020 and December 31, 2019 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018 and October 15, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment’s lending platform. LNR Property LLC (“LNR”) The Investing and Servicing Segment’s goodwill of $140.4 million at both September 30, 2020 and December 31, 2019 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. As of September 30, 2020 and December 31, 2019, the balance of the domestic servicing intangible was net of $38.2 million and $26.2 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, 2020 and December 31, 2019, the domestic servicing intangible had a balance of $52.8 million and $43.2 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, 2020 and December 31, 2019 (amounts in thousands): As of September 30, 2020 As of December 31, 2019 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ 14,589 $ — $ 14,589 $ 16,917 $ — $ 16,917 In-place lease intangible assets 133,244 (90,318) 42,926 135,293 (84,383) 50,910 Favorable lease intangible assets 24,188 (7,564) 16,624 24,218 (6,345) 17,873 Total net intangible assets $ 172,021 $ (97,882) $ 74,139 $ 176,428 $ (90,728) $ 85,700 The following table summarizes the activity within intangible assets for the nine months ended September 30, 2020 (amounts in thousands): Domestic In-place Lease Favorable Lease Servicing Intangible Intangible Rights Assets Assets Total Balance as of January 1, 2020 $ 16,917 $ 50,910 $ 17,873 $ 85,700 Amortization — (7,814) (1,249) (9,063) Sales — (170) — (170) Changes in fair value due to changes in inputs and assumptions (2,328) — — (2,328) Balance as of September 30, 2020 $ 14,589 $ 42,926 $ 16,624 $ 74,139 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): 2020 (remainder of) $ 2,636 2021 9,644 2022 7,862 2023 6,115 2024 4,722 Thereafter 28,571 Total $ 59,550 |
Secured Borrowings
Secured Borrowings | 9 Months Ended |
Sep. 30, 2020 | |
Secured Borrowings | |
Secured Borrowings | |
Secured Borrowings | 9. Secured Borrowings Secured Financing Agreements The following table is a summary of our secured financing agreements in place as of September 30, 2020 and December 31, 2019 (dollars in thousands): Outstanding Balance at Current Extended Weighted Average Pledged Asset Maximum September 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2020 2019 Repurchase Agreements: Commercial Loans May 2021 to Aug 2025 (b) May 2023 to Mar 2029 (b) (c) $ 6,643,722 $ 8,747,538 (d) $ 4,556,665 $ 3,640,620 Residential Loans Jun 2022 N/A LIBOR + 2.64% 37,046 400,000 23,866 11,835 Infrastructure Loans Feb 2022 N/A LIBOR + 2.00% 244,862 500,000 206,288 188,198 Conduit Loans Feb 2021 to Jun 2023 Feb 2022 to Jun 2024 LIBOR + 1.93% 171,497 350,000 127,162 86,575 CMBS/RMBS Oct 2020 to Dec 2029 (e) Aug 2021 to Jun 2030 (e) (f) 1,155,313 750,544 634,791 (g) 682,229 Total Repurchase Agreements 8,252,440 10,748,082 5,548,772 4,609,457 Other Secured Financing: Borrowing Base Facility Apr 2022 Apr 2024 LIBOR + 2.25% 50,194 650,000 (h) 37,594 198,955 Commercial Financing Facility Mar 2022 Mar 2029 GBP LIBOR + 1.75% 95,077 76,721 76,721 — Residential Financing Facility Sep 2022 Sep 2025 3.50% — 250,000 — — Infrastructure Acquisition Facility Sep 2021 Sep 2022 (i) 710,572 701,370 572,382 603,642 Infrastructure Financing Facilities Jul 2022 to Oct 2022 Oct 2024 to Jul 2027 LIBOR + 2.11% 583,319 1,250,000 464,487 428,206 Property Mortgages - Fixed rate Nov 2024 to Aug 2052 (j) N/A 4.00% 1,288,513 1,077,800 1,077,800 1,196,492 Property Mortgages - Variable rate Nov 2021 to Jul 2030 N/A (k) 926,495 927,300 908,906 696,503 Term Loan and Revolver (l) N/A (l) N/A (l) 516,000 396,000 399,000 FHLB Feb 2021 N/A 1.99% 948,409 1,600,000 619,500 867,870 Total Other Secured Financing 4,602,579 7,049,191 4,153,390 4,390,668 $ 12,855,019 $ 17,797,273 9,702,162 9,000,125 Unamortized net discount (9,908) (8,347) Unamortized deferred financing costs (76,362) (85,730) $ 9,615,892 $ 8,906,048 (a) Subject to certain conditions as defined in the respective facility agreement. (b) For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions. (c) Certain facilities with an outstanding balance of $1.3 billion as of September 30, 2020 are indexed to GBP LIBOR and EURIBOR. The remainder have a weighted average rate of LIBOR + 2.02%. (d) The aggregate initial maximum facility size of $8.7 billion may be increased at our option, subject to certain conditions. This amount includes such upsizes. (e) Certain facilities with an outstanding balance of $285.9 million as of September 30, 2020 carry a rolling 11-month or 12-month term which may reset monthly or quarterly with the lender's consent. These facilities carry no maximum facility size. (f) A facility with an outstanding balance of $184.2 million as of September 30, 2020 has a fixed annual interest rate of 3.50 %. All other facilities are variable rate with a weighted average rate of LIBOR + 1.57%. (g) Includes: (i) $184.2 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $41.3 million outstanding on one of our repurchase facilities that represents the 49 % pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 14). (h) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (i) Consists of an annual interest rate of the applicable currency benchmark index + 2.00%. (j) The weighted average maturity is 7.0 years as of September 30, 2020. (k) Includes a $600.0 million first mortgage and mezzanine loan secured by our Medical Office Portfolio. This debt has a weighted average interest rate of LIBOR + 2.07% that we swapped to a fixed rate of 3.34%. The remainder have a weighted average rate of LIBOR + 2.63%. (l) Consists of: (i) a $396.0 million term loan facility that matures in July 2026 with an annual interest rate of LIBOR + 2.50%; and (ii) a $120.0 million revolving credit facility that matures in July 2024 with an annual interest rate of LIBOR + 3.00%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $3.7 billion as of September 30, 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. In January 2020, we entered into a CMBS/RMBS repurchase facility to finance certain CMBS investments within a consolidated joint venture in which we hold a 51 % ownership interest. The facility carries a rolling 12-month term which may reset quarterly with the lender’s consent and an annual interest rate of three-month LIBOR + 1.35% to 1.85 %. The facility’s maximum facility size is at the discretion of the lender. This facility does not permit valuation adjustments based on capital markets activity. In February 2020, we amended a Commercial Loans repurchase facility to increase available borrowings by $200.0 million to $1.8 billion. In March 2020, we amended an Infrastructure Financing Facility to increase available borrowings by $250.0 million to $750.0 million. In March 2020, we entered into a Commercial Financing Facility to finance non-U.S. commercial loans held-for-investment. The facility carries a two-year initial term with three one-year extension options and includes an option to extend the maturity for each underlying asset for up to four additional years. The facility has an annual interest rate of GBP LIBOR + 1.75%. This facility shares up to $500.0 million of $2.0 billion of maximum borrowings with a Commercial Loans repurchase facility. In June 2020, we amended a Residential Loans repurchase facility with a maximum facility size of $400.0 million to extend the current maturity from February 2021 to June 2022. In June 2020, we amended a Commercial Loans repurchase facility and a Conduit Loans repurchase facility with an aggregate maximum facility size of $950.0 million to extend the current maturity from June 2022 to June 2023. During the three months ended June 30, 2020, we entered into mortgage loans with total borrowings of $217.1 million to refinance our Woodstar I Portfolio. The loans carry ten-year terms and weighted average annual interest rates of LIBOR + 2.71 %. A portion of the net proceeds from the mortgage loans was used to repay $117.0 million of outstanding government sponsored mortgage loans. We recognized a loss on extinguishment of debt of $2.2 million in our condensed consolidated statement of operations in connection with the repayment of the government sponsored mortgage loans. one In September 2020, we entered into a Residential Loan Financing facility to finance residential loans held-for-sale. The facility carries a two-year initial term with the option to subsequently convert the loan to a three-year term loan. The facility has a maximum facility size of $250.0 million and an annual interest rate of the greater of 3.50% or one-month LIBOR + 2.75%. This facility does not permit valuation adjustments based on capital markets activity. Our secured financing agreements contain certain financial tests and covenants. As of September 30, 2020, we were in compliance with all such covenants. 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 75% 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 the 25% of repurchase agreements containing margin call provisions for general capital markets activity, approximately 17 % 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 agreement. For the three and nine months ended September 30, 2020, approximately $9.5 million and $27.3 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, 2019, approximately $8.1 million and $24.9 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations. Collateralized Loan Obligations In August 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2019-FL1. On the closing date, the CLO issued $1.1 billion principal amount of notes, of which $936.4 million was purchased by third party investors. We retained $86.6 million of notes, along with preferred shares with a liquidation preference of $77.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. During the nine months ended September 30, 2020, we utilized the reinvestment feature, contributing $88.1 million of additional interests into the CLO. The following table is a summary of our CLO as of September 30, 2020 and December 31, 2019 (amounts in thousands): Face Carrying Weighted September 30, 2020 Count Amount Value Average Spread Maturity Collateral assets 24 $ 1,099,672 $ 1,099,558 LIBOR + 3.83% (a) Feb 2024 (b) Financing 1 936,375 929,931 LIBOR + 1.64% (c) July 2038 (d) December 31, 2019 Collateral assets 20 $ 1,073,504 $ 1,073,504 LIBOR + 3.34% (a) Nov 2023 (b) Financing 1 936,375 928,060 LIBOR + 1.65% (c) July 2038 (d) (a) Represents the weighted-average coupon earned on variable rate loans during the respective year-to-date period. Of the loans financed by the CLO as of September 30, 2020, 9% earned fixed-rate weighted average interest of 6.84%. (b) Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets. (c) Represents the weighted-average cost of financing incurred during the respective year-to-date period, inclusive of deferred issuance costs. (d) Repayments of the CLO are tied to timing of the related collateral asset repayments. The term of the CLO financing obligation represents the legal final maturity date. We incurred $9.2 million of issuance costs in connection with the CLO, which are amortized on an effective yield basis over the estimated life of the CLO. For the three and nine months ended September 30, 2020, approximately $0.7 million and $1.9 million, respectively, of amortization of deferred financing costs was included in interest expense on our condensed consolidated statements of operations. As of September 30, 2020 and December 31, 2019, our unamortized issuance costs were $6.4 million and $8.3 million, respectively. The CLO is considered a VIE, for which we are deemed the primary beneficiary. We therefore consolidate the CLO. Refer to Note 14 for further discussion. Maturities 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 following table sets forth our principal repayments schedule for secured financings based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands): Repurchase Other Secured Agreements Financing CLO Total 2020 (remainder of) $ 80,429 $ 311,142 $ — $ 391,571 2021 764,290 782,007 — 1,546,297 2022 1,364,073 547,960 — 1,912,033 2023 1,108,155 706,658 — 1,814,813 2024 843,591 235,852 — 1,079,443 Thereafter 1,388,234 1,569,771 936,375 (a) 3,894,380 Total $ 5,548,772 $ 4,153,390 $ 936,375 $ 10,638,537 (a) Assumes utilization of the reinvestment feature. |
Unsecured Senior Notes
Unsecured Senior Notes | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 and December 31, 2019 (dollars in thousands): Remaining Coupon Effective Maturity Period of Carrying Value at Rate Rate (1) Date Amortization September 30, 2020 December 31, 2019 2021 Senior Notes (February) 3.63 % (2) 3.89 % 2/1/2021 0.3 years $ 500,000 $ 500,000 2021 Senior Notes (December) 5.00 % 5.32 % 12/15/2021 1.2 years 700,000 700,000 2023 Convertible Notes 4.38 % 4.86 % 4/1/2023 2.5 years 250,000 250,000 2025 Senior Notes 4.75 % (3) 5.04 % 3/15/2025 4.5 years 500,000 500,000 Total principal amount 1,950,000 1,950,000 Unamortized discount—Convertible Notes (2,826) (3,610) Unamortized discount—Senior Notes (8,790) (12,144) Unamortized deferred financing costs (3,829) (5,624) Carrying amount of debt components $ 1,934,555 $ 1,928,622 Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes $ 3,755 $ 3,755 (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our Convertible Notes, the value of which reduced the initial liability and was recorded in additional paid-in-capital. (2) The coupon on the February 2021 Senior Notes is 3.63%. At closing, we swapped the notes to a floating rate of LIBOR + 1.28%. (3) The coupon on the 2025 Senior Notes is 4.75%. At closing, we swapped $470.0 million of the notes to a floating rate of LIBOR + 2.53%. Our unsecured senior notes contain certain financial tests and covenants. As of September 30, 2020, we were in compliance with all such covenants. Convertible Senior Notes We recognized interest expense of $3.1 million and $9.2 million during the three and nine months ended September 30, 2020, respectively, from our unsecured Convertible Notes. We recognized interest expense of $3.1 million and $9.3 million during the three and nine months ended September 30, 2019, respectively, from our unsecured Convertible Notes. The following table details the conversion attributes of our Convertible Notes outstanding as of September 30, 2020: September 30, 2020 Conversion Conversion Rate (1) Price (2) 2023 Convertible Notes 38.5959 $ 25.91 (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, 2020, the market price of the Company’s common stock was $15.09 per share. The if-converted value of the 2023 Convertible Notes was less than their principal amount by $104.4 million at September 30, 2020 as the closing market price per share. The if-converted value of the principal amount of the 2023 Convertible Notes was $145.6 million as of September 30, 2020. |
Loan Securitization_Sale Activi
Loan Securitization/Sale Activities | 9 Months Ended |
Sep. 30, 2020 | |
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. 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. Within the Commercial and Residential Lending Segment, we acquire residential mortgage loans with the intent to sell these mortgage loans to VIEs for the purpose of securitization. These VIEs then issue RMBS that are collateralized by these assets. In certain instances, we retain an interest in the CMBS or RMBS VIE and/or serve as special servicer or servicing administrator for the VIE. In these circumstances, we generally consolidate the VIE into which the loans were sold. The following summarizes the face amount and proceeds of commercial and residential loans securitized for the three and nine months ended September 30, 2020 and 2019 (amounts in thousands): Commercial Loans Residential Loans Face Amount Proceeds Face Amount Proceeds For the Three Months Ended September 30, 2020 $ 151,295 $ 157,497 $ 478,911 $ 499,321 2019 262,528 274,714 545,976 569,590 For the Nine Months Ended September 30, 2020 $ 487,130 $ 509,890 $ 1,443,691 $ 1,487,761 2019 787,160 826,932 886,187 921,602 The securitization of these commercial and residential loans does not result in a discrete gain or loss since they are carried under the fair value option. 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. Commercial and Residential Loan Sales Within the Commercial and Residential Lending Segment, we originate or acquire 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. We also may sell certain of our previously-acquired residential loans to third parties outside a securitization. The following table summarizes our loans sold by the Commercial and Residential Lending Segment, net of expenses (amounts in thousands): Loan Transfers Accounted for as Sales Commercial Residential Face Amount (1) Proceeds (1) Face Amount Proceeds For the Three Months Ended September 30, 2020 $ — $ — $ — $ — 2019 53,288 53,249 1,684 1,743 For the Nine Months Ended September 30, 2020 $ 399,132 $ 396,078 $ 550 $ 604 2019 554,710 551,700 25,526 26,260 (1) During the nine months ended September 30, 2020, we sold $230.9 million and $168.2 million of senior interests in first mortgage loans and whole loan interests, respectively, for proceeds of $224.1 million and $172.0 million, respectively. During the nine months ended September 30, 2019, all sales were of senior interests in first mortgage loans. During the nine months ended September 30, 2020, losses recognized by the Commercial and Residential Lending Segment on sales of commercial loans were $1.0 million. There were no sales of commercial loans during the three months ended September 30, 2020. During the three and nine months ended September 30, 2019, gains recognized by the Commercial and Residential Lending Segment on sales of commercial loans were $0.5 million and $3.5 million, respectively. The sale of residential loans does not result in a discrete gain or loss since they are carried under the fair value option. Infrastructure Loan Sales During the nine months ended September 30, 2020, the Infrastructure Lending Segment sold loans held-for-sale with an aggregate face amount of $38.7 million for proceeds of $38.4 million, recognizing gains of $0.3 million. There were no sales of loans by the Infrastructure Lending Segment during the three months ended September 30, 2020. During the three and nine months ended September 30, 2019, the Infrastructure Lending Segment sold loans held-for-sale with an aggregate face amount of $47.3 million and $404.1 million, respectively, for proceeds of $47.0 million and $393.3 million. A gain of $3.1 million was recognized during the nine months ended September 30, 2019. There was no gain recognized during the three months ended September 30, 2019. In connection with these sales, we sold an interest rate swap guarantee for cash payment of $3.1 million and recognized a decrease in fair value of $2.7 million within (loss) gain on derivative financial instruments, net in our condensed consolidated statement of operations during the nine months ended September 30, 2019. Refer to Note 12 for further discussion of our interest rate swap guarantees. |
Derivatives and Hedging Activit
Derivatives and Hedging Activity | 9 Months Ended |
Sep. 30, 2020 | |
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. As of September 30, 2020 and December 31, 2019, the Company did not have any designated hedges. Non-designated Hedges and Derivatives We have 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; 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, 2020 (notional amounts in thousands): Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity Fx contracts – Buy Euros ("EUR") 1 1,915 EUR November 2022 Fx contracts – Sell EUR 289 250,530 EUR October 2020 – November 2025 Fx contracts – Sell Pounds Sterling ("GBP") 120 373,948 GBP October 2020 – May 2024 Fx contracts – Sell Australian dollar ("AUD") 13 126,546 AUD August 2021 – November 2021 Interest rate swaps – Paying fixed rates 56 1,755,593 USD March 2023 – September 2030 Interest rate swaps – Receiving fixed rates 2 970,000 USD January 2021 - March 2025 Interest rate caps 22 951,462 USD October 2020 – April 2025 Credit index instruments 4 69,000 USD September 2058 – August 2061 Interest rate swap guarantees 6 383,080 USD March 2022 – June 2025 Total 513 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, 2020 and December 31, 2019 (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, 2020 2019 2020 2019 Interest rate contracts $ 38,479 $ 14,385 $ 3,097 $ — Interest rate swap guarantees — — 958 614 Foreign exchange contracts 25,805 14,558 9,397 7,834 Credit index instruments 541 — — 292 Total derivatives $ 64,825 $ 28,943 $ 13,452 $ 8,740 (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 for the three and nine months ended September 30, 2020 and 2019 (amounts in thousands): 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 2020 2019 2020 2019 Interest rate contracts (Loss) gain on derivative financial instruments $ 259 $ (7,898) $ (52,129) $ (21,733) Interest rate swap guarantees (Loss) gain on derivative financial instruments 260 (468) (345) (3,640) Foreign exchange contracts (Loss) gain on derivative financial instruments (28,514) 30,426 17,644 46,116 Credit index instruments (Loss) gain on derivative financial instruments (102) (127) 345 (1,049) $ (28,097) $ 21,933 $ (34,485) $ 19,694 |
Offsetting Assets and Liabiliti
Offsetting Assets and Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
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 (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, 2020 Derivative assets $ 64,825 $ — $ 64,825 $ 9,397 $ 39,842 $ 15,586 Derivative liabilities $ 13,452 $ — $ 13,452 $ 9,397 $ 3,097 $ 958 Repurchase agreements 5,548,772 — 5,548,772 5,548,772 — — $ 5,562,224 $ — $ 5,562,224 $ 5,558,169 $ 3,097 $ 958 As of December 31, 2019 Derivative assets $ 28,943 $ — $ 28,943 $ 5,312 $ 14,208 $ 9,423 Derivative liabilities $ 8,740 $ — $ 8,740 $ 5,312 $ 292 $ 3,136 Repurchase agreements 4,609,457 — 4,609,457 4,609,457 — — $ 4,618,197 $ — $ 4,618,197 $ 4,614,769 $ 292 $ 3,136 |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2020 | |
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. During the year ended December 31, 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, which is considered to be a VIE. We are the primary beneficiary of, and therefore consolidate, the CLO in our financial statements as we have both (i) the power to direct the activities in our role as collateral manager that most significantly impact the CLO’s economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the CLO that could be potentially significant through the subordinate interests we own. The following table details the assets and liabilities of our consolidated CLO as of September 30, 2020 and December 31, 2019 (amounts in thousands): September 30, 2020 December 31, 2019 Assets: Loans held-for-investment $ 1,099,558 1,073,504 Accrued interest receivable 3,082 3,129 Other assets 328 26,496 Total Assets $ 1,102,968 $ 1,103,129 Liabilities Accounts payable, accrued expenses and other liabilities $ 621 $ 1,362 Collateralized loan obligations, net 929,931 928,060 Total Liabilities $ 930,552 $ 929,422 Assets held by this CLO are restricted and can be used only to settle obligations of the CLO, including the subordinate interests owned by us. The liabilities of this CLO are non-recourse to us and can only be satisfied from the assets of the CLO. We also hold controlling interests in other non-securitization entities that are considered VIEs. SPT Dolphin Intermediate LLC (“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 total assets of $676.5 million and liabilities of $446.8 million as of September 30, 2020. In December 2019, we entered into a newly-formed joint venture (the “CMBS JV”) within our Investing and Servicing Segment, which is considered a VIE because the third party interest holder does not carry kick-out rights or substantive participating rights. We hold a 51 % ownership interest and are deemed the primary beneficiary of the CMBS JV. This VIE had total assets of $332.4 million and liabilities of $84.8 million as of September 30, 2020. Refer to Note 16 for further discussion. In addition to the above non-securitization entities, we have smaller VIEs with total assets of $97.3 million and liabilities of $53.8 million as of September 30, 2020. 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, 2020, five of our collateralized debt obligation (“CDO”) structures within our Investing and Servicing Segment were in default or imminent default, which, pursuant to the underlying indentures, changes the rights of the variable interest holders. 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, 2020, none of these five 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, 2020, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $23.5 million on a fair value basis. As of September 30, 2020, 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 $4.1 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 $21.8 million as of September 30, 2020, 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, 2020 | |
Related-Party Transactions | |
Related-Party Transactions | 15. Related-Party Transaction s Management Agreement We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement. Base Management Fee. Incentive Fee. no Expense Reimbursement. For the three months ended September 30, 2020 and 2019, approximately $1.5 million and $1.9 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, 2020 and 2019, approximately $5.2 million and $5.8 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of September 30, 2020 and December 31, 2019, approximately $2.9 million and $3.5 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. There were no RSAs granted during the three months ended September 30, 2020 or 2019. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.1 million and $1.2 million during the three months ended September 30, 2020 and 2019, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the nine months ended September 30, 2020 and 2019, we granted 341,635 and 182,861 RSAs, respectively, at grant date fair values of $3.9 million and $4.1 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $2.5 million and $3.0 million during the nine months ended September 30, 2020 and 2019, respectively. 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 September 2019, we granted RSUs to our Manager under the 2017 Manager Equity Plan. In April 2018, we granted RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 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 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants. Investments in Loans In January 2020, the Company originated a $3.5 million bridge loan to a third party borrower for the development and recapitalization of luxury cabin rentals. In February 2020, the bridge loan was repaid, and the Company originated a $99.0 million first mortgage loan to the same borrower. The loan bears interest at a fixed rate of 10.5% plus fees and contains a term of 36 months with two one-year extension options. Certain members of our executive team and board of directors own equity interests in the borrower. The investment was approved by our independent directors. In January 2020, the Company co-originated a €70.3 million mezzanine loan with SEREF, an affiliate of our Manager, to the third party that acquired our property portfolio in Ireland in December 2019. The Company and SEREF each originated million. The loan matures in October 2025. During the three and nine months ended September 30, 2020, the Company acquired $57.6 million and $185.0 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Refer to Note 7 for further discussion. During the three months ended September 30, 2020, the Company amended a $4.5 million subordinated loan to a residential mortgage originator in which it holds an equity interest, to extend the maturity from September 2020 to September 2021. During the three months ended September 30, 2020, the Company received a $245.0 million partial repayment on a first mortgage and mezzanine loan that was originated in August 2017 related to an office campus located in Irvine, California. An affiliate of our Manager has a non-controlling equity interest in the borrower. Lease Arrangements In March 2020, we entered into an office lease agreement with an entity which is controlled by our Chairman and CEO through majority equity ownership of the entity. The leased premises are currently under construction and will serve as our new Miami Beach office when our existing lease in Miami Beach expires on December 31, 2021. The lease will commence after delivery of the office space to us, but no earlier than July 30, 2021. The lease is for approximately 74,000 square feet of office space, has an initial term of 15 years and requires monthly lease payments starting in the tenth month after lease commencement. The lease payments are based on an annual base rate of $52.00 per square foot that increases by 3% each anniversary following commencement, plus our pro rata share of building operating expenses. In April 2020, we provided a $1.9 million cash security deposit to the landlord. Prior to the execution of this lease, we engaged an independent third party leasing firm and external counsel to advise the independent directors of our board of directors on market terms for the lease. The terms of the lease were approved by our independent directors. Other Related-Party Arrangements Highmark Residential (“Highmark”), an affiliate of our Manager, now provides property management services for all 32 properties within our Woodstar I Portfolio. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During both the three months ended September 30, 2020 and 2019, property management fees to Highmark of 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, 2020 | |
Stockholders' Equity and Non-Controlling Interests | |
Stockholders' Equity and Non-Controlling Interests | 16. Stockholders’ Equity and Non-Controlling Interests During the nine months ended September 30, 2020, our board of directors declared the following dividends: Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency 9/16/20 9/30/20 9/29/20 10/15/20 $ 0.48 Quarterly 6/16/20 6/30/20 6/29/20 7/15/20 0.48 Quarterly 2/25/20 3/31/20 3/30/20 4/15/20 0.48 Quarterly During the nine months ended September 30, 2020 and 2019, there were no shares issued under our At-The-Market Equity Offering Sales Agreement. During the nine months ended September 30, 2020 and 2019, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) were not material. In February 2020, our board of directors authorized the repurchase of up to $400.0 million of our outstanding common shares and Convertible Notes over a period of one year . Purchases made pursuant to the program will be made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases are discretionary and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. During the nine months ended September 30, 2020, we repurchased Convertible Notes under our repurchase program. As of September 30, 2020, we had 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 the 2017 Manager Equity Plan during the nine months ended September 30, 2020 and 2019 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period September 2019 RSU 1,200,000 $ 29,484 (1) April 2018 RSU 775,000 16,329 3 years March 2017 RSU 1,000,000 22,240 3 years (1) Of the amount granted, 218,898 vested immediately on the grant date and the remaining amount vests over a three-year period. 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, 2020 1,413,170 1,305,597 2,718,767 $ 22.74 Granted 1,014,753 — 1,014,753 10.98 Vested (640,727) (522,359) (1,163,086) 22.50 Forfeited (20,960) — (20,960) 14.23 Balance as of September 30, 2020 1,766,236 783,238 2,549,474 18.23 As of September 30, 2020, there were 6.5 million shares of common stock available for future grants under the 2017 Manager Equity Plan and the 2017 Equity Plan. Non-Controlling Interests in Consolidated Subsidiaries In connection with our Woodstar II Portfolio acquisitions, we issued 10.2 million Class A Units in our consolidated subsidiary, SPT Dolphin, and rights to receive an additional 1.9 million Class A Units if certain contingent events occur. As of September 30, 2020, 1.8 million of the 1.9 million contingent Class A Units were issued. 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. During the nine months ended September 30, 2020, redemptions of 0.5 million of the Class A Units were received, of which 0.4 million were settled in common stock and 0.1 million were settled for $1.3 million in cash, leaving 10.5 million Class A Units outstanding as of September 30, 2020. In consolidation, the outstanding Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our condensed consolidated balance sheets, the balance of which was $225.4 million and $235.9 million as of September 30, 2020 and December 31, 2019, respectively. 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, 2020, we recognized net income attributable to non-controlling interests of $5.1 million and $15.3 million, respectively, associated with these Class A Units. During the three and nine months ended September 30, 2019, we recognized net income attributable to non-controlling interests of $5.2 million and $16.3 million, respectively, associated with these Class A Units. As discussed in Note 14, we entered into the CMBS JV within our Investing and Servicing Segment in December 2019. Because the CMBS JV was deemed a VIE for which we were the primary beneficiary, this transaction was not recognized as a sale for GAAP purposes. Instead, the 49% interest of our joint venture partner is reflected as a non-controlling interest in consolidated subsidiaries on our consolidated balance sheets, and any net income attributable to this 49% joint venture interest is reflected within net income attributable to non-controlling interests in our consolidated statement of operations. The non-controlling interests in the CMBS JV were $127.8 million and $175.6 million as of September 30, 2020 and December 31, 2019, respectively. During the three and nine months ended September 30, 2020, net income attributable to non-controlling interests was $6.8 million and $7.6 million, respectively. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Basic Earnings Income attributable to STWD common stockholders $ 151,834 $ 140,396 $ 224,721 $ 337,795 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,721) (1,205) (3,422) (2,779) Basic earnings $ 150,113 $ 139,191 $ 221,299 $ 335,016 Diluted Earnings Income attributable to STWD common stockholders $ 151,834 $ 140,396 $ 224,721 $ 337,795 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,721) (1,205) (3,422) (2,779) Add: Interest expense on Convertible Notes (1) 3,055 3,071 * 9,306 Add: Undistributed earnings to participating shares 663 188 — — Less: Undistributed earnings reallocated to participating shares (642) (182) — — Diluted earnings $ 153,189 $ 142,268 $ 221,299 $ 344,322 Number of Shares: Basic — Average shares outstanding 282,596 279,992 281,686 278,934 Effect of dilutive securities — Convertible Notes (1) 9,649 9,649 * 9,857 Effect of dilutive securities — Contingently issuable shares — 38 — 38 Effect of dilutive securities — Unvested non-participating shares 213 233 182 192 Diluted — Average shares outstanding 292,458 289,912 281,868 289,021 Earnings Per Share Attributable to STWD Common Stockholders: Basic $ 0.53 $ 0.50 $ 0.79 $ 1.20 Diluted $ 0.52 $ 0.49 $ 0.79 $ 1.19 (1) The Company does not intend to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the periods presented above 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, 2020 and 2019, participating shares of 12.8 million and 13.4 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, 2020 and 2019 included 10.5 million and 10.9 million potential shares, respectively, 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, 2020 | |
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 (Loss) on Foreign Available-for- Currency Sale Securities Translation Total Three Months Ended September 30, 2020 Balance at July 1, 2020 $ 42,930 $ (64) $ 42,866 OCI before reclassifications (581) — (581) Amounts reclassified from AOCI — — — Net period OCI (581) — (581) Balance at September 30, 2020 $ 42,349 $ (64) $ 42,285 Three Months Ended September 30, 2019 Balance at July 1, 2019 $ 53,049 $ 4,075 $ 57,124 OCI before reclassifications (520) (4,168) (4,688) Amounts reclassified from AOCI (59) — (59) Net period OCI (579) (4,168) (4,747) Balance at September 30, 2019 $ 52,470 $ (93) $ 52,377 Nine Months Ended September 30, 2020 Balance at January 1, 2020 $ 50,996 $ (64) $ 50,932 OCI before reclassifications (8,647) — (8,647) Amounts reclassified from AOCI — — — Net period OCI (8,647) — (8,647) Balance at September 30, 2020 $ 42,349 $ (64) $ 42,285 Nine Months Ended September 30, 2019 Balance at January 1, 2019 $ 53,515 $ 5,145 $ 58,660 OCI before reclassifications (986) (5,238) (6,224) Amounts reclassified from AOCI (59) — (59) Net period OCI (1,045) (5,238) (6,283) Balance at September 30, 2019 $ 52,470 $ (93) $ 52,377 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2020 | |
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 Level II Level III 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. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable. Pricing Verification Unobservable Inputs Fair Value on a Recurring Basis Loans held-for-sale, commercial valued using securitized pricing should be classified in Level II of the fair value hierarchy. Mortgage loans classified in Level III are transferred to Level II if securitized pricing becomes available. Loans held-for-sale and loans held-for-investment, residential We measure the fair value of our residential mortgage loans held-for-sale and held-for-investment based on the net present value of expected future cash flows using a combination of observable and unobservable inputs. Observable market participant assumptions include pricing related to trades of residential mortgage loans with similar characteristics. Unobservable inputs include the expectation of future cash flows, which involves judgments about the underlying collateral, the creditworthiness of the borrower, estimated prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs, these loans have been classified within Level III. RMBS CMBS Equity security Domestic servicing rights Derivatives expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. Although we have determined that the majority of the inputs used to value our derivatives fall within Level II of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level III inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of September 30, 2020 and December 31, 2019, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level II of the fair value hierarchy. Liabilities of consolidated VIEs Our consolidated VIE liabilities generally represent bonds that are not owned by us. The majority of these are either traded in the marketplace or can be analogized to similar securities that are traded in the marketplace. For these liabilities, pricing is considered to be Level II, where the valuation is based upon quoted prices for similar instruments traded in active markets. We generally utilize third party pricing service providers for valuing these liabilities. In order to determine whether to utilize the valuations provided by third parties, we conduct an ongoing evaluation of their valuation methodologies and processes, as well as a review of the individual valuations themselves. In evaluating third party pricing for reasonableness, we consider a variety of factors, including market transaction information for the particular bond, market transaction information for bonds within the same trust, market transaction information for similar bonds, the bond’s ratings and the bond’s subordination levels. For the minority portion of our consolidated VIE liabilities which consist of unrated or non-investment grade bonds that are not owned by us, pricing may be either Level II or Level III. If independent third party pricing similar to that noted above is available, we consider the valuation to be Level II. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and we consider the valuation to be Level III. For VIE liabilities classified as Level III, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. VIE liabilities may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the VIE liabilities become or cease to be observable. Assets of consolidated VIEs liabilities as an indicator of the fair value of VIE assets as a whole, we have determined that our valuations of VIE assets in their entirety should be classified in Level III of the fair value hierarchy. Fair Value on a Nonrecurring Basis We determine the fair value of our financial assets and liabilities measured at fair value on a nonrecurring basis as follows: Loans held-for-sale, infrastructure We measure the fair value of infrastructure loans held-for-sale, which are carried at the lower of amortized cost or fair value, utilizing bids periodically 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 Only Disclosed Loans held-for-investment and loans held-for-sale We estimate the fair values of our loans not carried at fair value on a recurring basis by discounting their expected cash flows at a rate we estimate would be demanded by the market participants that are most likely to buy our loans. 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 loans in their entirety would be classified in Level III of the fair value hierarchy. HTM debt securities We estimate the fair value of our mandatorily redeemable preferred equity interests in commercial real estate companies and infrastructure bonds using the same methodology described for our loans held-for- investment. We estimate the fair value of our HTM CMBS using the same methodology described for our CMBS carried at fair value on a recurring basis. Secured financing agreements, CLO and unsecured senior notes not convertible The fair value of the secured financing agreements, CLO and unsecured senior notes not convertible are determined by discounting the contractual cash flows at the interest rate we estimate such arrangements would bear if executed in the current market. We have determined that our valuation of these instruments should be classified in Level III of the fair value hierarchy. Convertible Notes The fair value of the debt component of our Convertible Notes is estimated by discounting the contractual cash flows at the interest rate we estimate such notes would bear if sold in the current market without the embedded conversion option which, in accordance with ASC 470, is reflected as a component of equity. We have determined that our valuation of our Convertible Notes should be classified in Level III 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, 2020 and December 31, 2019 (amounts in thousands): September 30, 2020 Total Level I Level II Level III Financial Assets: Loans under fair value option $ 1,269,080 $ — $ — $ 1,269,080 RMBS 170,270 — — 170,270 CMBS 23,489 — 1,640 21,849 Equity security 10,058 10,058 — — Domestic servicing rights 14,589 — — 14,589 Derivative assets 64,825 — 64,825 — VIE assets 64,477,475 — — 64,477,475 Total $ 66,029,786 $ 10,058 $ 66,465 $ 65,953,263 Financial Liabilities: Derivative liabilities $ 13,452 $ — $ 13,452 $ — VIE liabilities 62,876,265 — 60,560,959 2,315,306 Total $ 62,889,717 $ — $ 60,574,411 $ 2,315,306 December 31, 2019 Total Level I Level II Level III Financial Assets: Loans under fair value option $ 1,436,194 $ — $ — $ 1,436,194 RMBS 189,576 — — 189,576 CMBS 37,360 — 12,352 25,008 Equity security 12,664 12,664 — — Domestic servicing rights 16,917 — — 16,917 Derivative assets 28,943 — 28,943 — VIE assets 62,187,175 — 62,187,175 Total $ 63,908,829 $ 12,664 $ 41,295 $ 63,854,870 Financial Liabilities: Derivative liabilities $ 8,740 $ — $ 8,740 $ — VIE liabilities 60,743,494 — 58,206,102 2,537,392 Total $ 60,752,234 $ — $ 58,214,842 $ 2,537,392 The changes in financial assets and liabilities classified as Level III are as follows for the three and nine months ended September 30, 2020 and 2019 (amounts in thousands): Domestic Loans at Servicing VIE Three Months Ended September 30, 2020 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2020 balance $ 894,613 $ 174,281 $ 21,891 $ 13,955 $ 64,175,387 $ (2,129,529) $ 63,150,598 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 61,384 — (56) 634 (202,560) (30,577) (171,175) Net accretion — 2,633 — — — — 2,633 Included in OCI — (581) — — — — (581) Purchases / Originations 1,013,158 — — — — — 1,013,158 Sales (656,818) — — — — — (656,818) Cash repayments / receipts (43,257) (6,063) (213) — — (329) (49,862) Transfers into Level III — — — — — (485,332) (485,332) Transfers out of Level III — — — — — 322,888 322,888 Consolidation of VIEs — — — — 512,300 — 512,300 Deconsolidation of VIEs — — 227 — (7,652) 7,573 148 September 30, 2020 balance $ 1,269,080 $ 170,270 $ 21,849 $ 14,589 $ 64,477,475 $ (2,315,306) $ 63,637,957 Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: Included in earnings $ 8,864 $ 2,633 $ (56) $ 634 $ (194,147) $ (30,577) $ (212,649) Included in OCI $ — $ (581) $ — $ — $ — $ — $ (581) Domestic Loans at Servicing VIE Three Months Ended September 30, 2019 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2019 balance $ 1,372,398 $ 200,874 $ 34,283 $ 18,874 $ 57,667,606 $ (2,374,002) $ 56,920,033 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 32,512 — 432 (625) (380,973) 28,005 (320,649) Net accretion — 2,446 — — — — 2,446 Included in OCI — (578) — — — — (578) Purchases / Originations 1,123,553 — 5,165 — — — 1,128,718 Sales (846,047) — — — — — (846,047) Issuances — — — — — (22,958) (22,958) Cash repayments / receipts (33,054) (7,445) (3,343) — — (12,516) (56,358) Transfers into Level III — — — — — (122,911) (122,911) Transfers out of Level III (225,813) — — — — 319,727 93,914 Consolidation of VIEs — — — — 1,999,780 (85,450) 1,914,330 Deconsolidation of VIEs — — (657) — (37,359) — (38,016) September 30, 2019 balance $ 1,423,549 $ 195,297 $ 35,880 $ 18,249 $ 59,249,054 $ (2,270,105) $ 58,651,924 Amount of unrealized gains (losses) included in earnings attributable to assets still held at September 30, 2019 $ 4,537 $ 2,390 $ 434 $ (625) $ (380,973) $ 28,005 $ (346,232) Domestic Loans at Servicing VIE Nine Months Ended September 30, 2020 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2020 balance $ 1,436,194 $ 189,576 $ 25,008 $ 16,917 $ 62,187,175 $ (2,537,392) $ 61,317,478 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 79,700 — 5,331 (2,328) (1,291,705) 107,019 (1,101,983) Net accretion — 7,967 — — — — 7,967 Included in OCI — (8,647) — — — — (8,647) Purchases / Originations 1,900,738 — — — — — 1,900,738 Sales (1,998,255) — (7,940) — — — (2,006,195) Issuances — — — — — (24,376) (24,376) Cash repayments / receipts (149,297) (18,626) (777) — — (9,589) (178,289) Transfers into Level III — — — — — (1,242,539) (1,242,539) Transfers out of Level III — — — — — 1,455,093 1,455,093 Consolidation of VIEs — — — — 3,589,657 (71,095) 3,518,562 Deconsolidation of VIEs — — 227 — (7,652) 7,573 148 September 30, 2020 balance $ 1,269,080 $ 170,270 $ 21,849 $ 14,589 $ 64,477,475 $ (2,315,306) $ 63,637,957 Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: Included in earnings $ 8,551 $ 7,967 $ (1,055) $ (2,328) $ (1,213,498) $ 107,019 $ (1,093,344) Included in OCI $ — $ (8,647) $ — $ — $ — $ — $ (8,647) Domestic Loans at Servicing VIE Nine Months Ended September 30, 2019 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2019 balance $ 671,282 $ 209,079 $ 25,228 $ 20,557 $ 53,446,364 $ (1,441,446) $ 52,931,064 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 65,669 — 1,153 (2,308) 39,961 51,907 156,382 Net accretion — 7,484 — — — — 7,484 Included in OCI — (1,044) — — — — (1,044) Purchases / Originations 2,775,787 — 5,165 — — — 2,780,952 Sales (1,774,794) — (3,978) — — — (1,778,772) Issuances — — — — — (81,681) (81,681) Cash repayments / receipts (88,582) (20,222) (8,933) — — (15,786) (133,523) Transfers into Level III — — 5,350 — — (1,374,505) (1,369,155) Transfers out of Level III (225,813) — — — — 750,546 524,733 Consolidation of VIEs — — — — 6,103,915 (193,300) 5,910,615 Deconsolidation of VIEs — — 11,895 — (341,186) 34,160 (295,131) September 30, 2019 balance $ 1,423,549 $ 195,297 $ 35,880 $ 18,249 $ 59,249,054 $ (2,270,105) $ 58,651,924 Amount of total gains (losses) included in earnings attributable to assets still held at September 30, 2019 $ 6,775 $ 7,397 $ 101 $ (2,308) $ 39,961 $ 51,907 $ 103,833 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, 2020 December 31, 2019 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment and loans held-for-sale $ 10,662,245 $ 10,583,876 $ 10,034,030 $ 10,086,372 HTM debt securities 541,296 512,808 570,638 568,727 Financial liabilities not carried at fair value: Secured financing agreements and CLO $ 10,545,823 $ 10,495,587 $ 9,834,108 $ 9,826,511 Unsecured senior notes 1,934,555 1,917,805 1,928,622 2,022,283 The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands): Carrying Value at Valuation Unobservable Range (Weighted Average) as of (1) September 30, 2020 Technique Input September 30, 2020 December 31, 2019 Loans under fair value option $ 1,269,080 Discounted cash flow Yield (b) 3.3% - 9.7% (4.7%) 3.4% - 5.9% Duration (c) 1.5 - 10.8 years ( 4.8 years) 1.3 - 11.3 years RMBS 170,270 Discounted cash flow Constant prepayment rate (a) 3.2% - 16.4% (7.3%) 3.1% - 24.9% Constant default rate (b) 1.3% - 5.0% (2.6%) 0.5% - 5.0% Loss severity (b) 0% - 79% (26%) (e) 0% - 93% (e) Delinquency rate (c) 8% - 28% (18%) 5% - 29% Servicer advances (a) 24% - 85% (61%) 27% - 85% Annual coupon deterioration (b) 0.0% - 0.9% (0.1%) 0% - 1.6% Putback amount per projected total collateral loss (d) 0% -25% (1.1%) 0% - 28% CMBS 21,849 Discounted cash flow Yield (b) 0% - 700.5% (6.1%) 0% - 122.9% Duration (c) 0 - 8.9 years ( 5.5 years) 0 - 9.7 years Domestic servicing rights 14,589 Discounted cash flow Debt yield (a) 7.75% (7.75%) 7.50% Discount rate (b) 15% (15%) 15% VIE assets 64,477,475 Discounted cash flow Yield (b) 0% - 751.1% (13.3%) 0% - 690.7% Duration (c) 0 - 19 years ( 3.9 years) 0 - 19.2 years VIE liabilities (2,315,306) Discounted cash flow Yield (b) 0% - 751.1% (13.3%) 0% - 690.7% Duration (c) 0 - 11.0 years ( 3.8 years) 0 - 12.7 years (1) The ranges and weighted averages of significant unobservable inputs are represented in percentages and years. Unobservable inputs were weighted by the relative carrying value of the instruments as of September 30, 2020. Information about Uncertainty of Fair Value Measurements (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) 17% and 34% of the portfolio falls within a range of 45% - 80% as of September 30, 2020 and December 31, 2019, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Income Taxes | 20. Income Taxes Certain of our domestic 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 mortgage loans, and investing in entities which engage in real estate-related operations. As of September 30, 2020 and December 31, 2019, approximately $1.3 billion and $1.6 billion, respectively, of assets 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 (benefit) provision determined using our statutory federal tax rate to our reported income tax (benefit) provision for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Federal statutory tax rate $ 37,711 21.0 % $ 32,448 21.0 % $ 54,231 21.0 % $ 77,140 21.0 % REIT and other non-taxable loss (24,688) (13.7) % (28,870) (18.7) % (41,697) (16.2) % (71,042) (19.3) % State income taxes 4,278 2.4 % 937 0.6 % 4,118 1.6 % 1,597 0.4 % Federal benefit of state tax deduction (899) (0.5) % (196) (0.1) % (865) (0.3) % (335) (0.1) % Net operating loss carryback rate differential (1,569) (0.9) % — — % (5,286) (2.0) % — — % Intra-entity transfer — — % — — % (3,781) (1.5) % — — % Other 10 — % 194 0.1 % 96 — % 1,020 0.3 % Effective tax rate $ 14,843 8.3 % $ 4,513 2.9 % $ 6,816 2.6 % $ 8,380 2.3 % The Company has used the discrete tax approach in calculating the tax benefit for the three and nine months ended September 30, 2020 due to the fact that a relatively small change in the Company’s projected pre-tax net income could result in a volatile effective tax rate. Under the discrete method, the Company determines its tax benefit based upon actual results as if the interim period was an annual period. In response to the COVID-19 pandemic, the U.S. and many other governments have enacted, or are contemplating enacting, measures to provide aid and economic stimulus. These measures include deferring the due dates of tax payments and other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws, and to allow companies to carry back tax net operating losses (“NOLs”) generated in 2018 to 2020 to the five preceding tax years. The Company plans to carry back its NOL generated this year to a year in which the federal tax rate was 35 %, resulting in a tax benefit from the NOL carryback for the three and nine months ended September 30, 2020. We continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 21. Commitments and Contingencie s As of September 30, 2020, 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. As of September 30, 2020, our Infrastructure Lending Segment had future infrastructure loan funding commitments totaling $241.6 million, including $146.2 million under revolvers and letters of credit (“LCs”), and $95.4 million under delayed draw term loans. As of September 30, 2020, $25.6 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, 2020, we had six outstanding guarantees on interest rate swaps maturing between March 2022 and June 2025. 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, 2020 | |
Segment Data | |
Segment Data | 22. Segment Dat a In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis. The table below presents our results of operations for the three months ended September 30, 2020 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 149,972 $ 17,835 $ — $ 1,597 $ — $ 169,404 $ — $ 169,404 Interest income from investment securities 21,385 635 — 23,587 — 45,607 (33,421) 12,186 Servicing fees 110 — — 13,749 — 13,859 (4,311) 9,548 Rental income 2,014 — 63,925 10,039 — 75,978 — 75,978 Other revenues 66 101 48 98 — 313 (2) 311 Total revenues 173,547 18,571 63,973 49,070 — 305,161 (37,734) 267,427 Costs and expenses: Management fees 297 — — 221 22,596 23,114 13 23,127 Interest expense 38,422 8,914 16,180 5,425 27,040 95,981 — 95,981 General and administrative 12,483 3,568 1,094 18,813 3,436 39,394 84 39,478 Acquisition and investment pursuit costs 757 62 — 65 — 884 — 884 Costs of rental operations 643 — 24,302 4,577 — 29,522 — 29,522 Depreciation and amortization 430 87 19,130 3,934 — 23,581 — 23,581 Credit loss provision (reversal), net 782 (4,369) — — — (3,587) — (3,587) Other expense 77 — 95 — — 172 — 172 Total costs and expenses 53,891 8,262 60,801 33,035 53,072 209,061 97 209,158 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 58,585 58,585 Change in fair value of servicing rights — — — 3,960 — 3,960 (3,326) 634 Change in fair value of investment securities, net 13,611 — — 3,249 — 16,860 (17,059) (199) Change in fair value of mortgage loans, net 59,402 — — 1,982 — 61,384 — 61,384 Earnings (loss) from unconsolidated entities 3,253 (80) — 358 — 3,531 (339) 3,192 (Loss) gain on derivative financial instruments, net (28,577) 110 (313) 38 645 (28,097) — (28,097) Foreign currency gain, net 25,302 110 14 26 — 25,452 — 25,452 Other (loss) income, net — — (1) 358 — 357 — 357 Total other income (loss) 72,991 140 (300) 9,971 645 83,447 37,861 121,308 Income (loss) before income taxes 192,647 10,449 2,872 26,006 (52,427) 179,547 30 179,577 Income tax (provision) benefit (16,700) (86) — 1,943 — (14,843) — (14,843) Net income (loss) 175,947 10,363 2,872 27,949 (52,427) 164,704 30 164,734 Net income attributable to non-controlling interests (3) — (5,072) (7,795) — (12,870) (30) (12,900) Net income (loss) attributable to Starwood Property Trust, Inc . $ 175,944 $ 10,363 $ (2,200) $ 20,154 $ (52,427) $ 151,834 $ — $ 151,834 The table below presents our results of operations for the three months ended September 30, 2019 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 $ 145,290 $ 22,763 $ — $ 3,977 $ — $ 172,030 $ — $ 172,030 Interest income from investment securities 18,163 810 — 32,556 — 51,529 (34,853) 16,676 Servicing fees 97 — — 18,243 — 18,340 (4,007) 14,333 Rental income — — 72,251 12,403 — 84,654 — 84,654 Other revenues 258 39 125 218 — 640 (3) 637 Total revenues 163,808 23,612 72,376 67,397 — 327,193 (38,863) 288,330 Costs and expenses: Management fees 363 — — 18 29,829 30,210 28 30,238 Interest expense 51,844 14,422 19,020 8,891 29,142 123,319 (163) 123,156 General and administrative 7,104 4,315 2,170 22,915 3,184 39,688 78 39,766 Acquisition and investment pursuit costs 506 21 — (364) — 163 — 163 Costs of rental operations 765 — 24,784 6,019 — 31,568 — 31,568 Depreciation and amortization 339 15 23,106 4,809 — 28,269 — 28,269 Credit loss reversal, net (39) — — — — (39) — (39) Other expense 77 — 46 — — 123 — 123 Total costs and expenses 60,959 18,773 69,126 42,288 62,155 253,301 (57) 253,244 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 61,767 61,767 Change in fair value of servicing rights — — — 57 — 57 (682) (625) Change in fair value of investment securities, net (303) — — 22,476 — 22,173 (21,907) 266 Change in fair value of mortgage loans, net 10,088 — — 22,433 — 32,521 — 32,521 Earnings from unconsolidated entities 2,507 — 223 253 — 2,983 (236) 2,747 Gain (loss) on sale of investments and other assets, net 482 (25) — 20,700 — 21,157 — 21,157 Gain (loss) on derivative financial instruments, net 15,729 (109) 5,900 (6,376) 6,789 21,933 — 21,933 Foreign currency loss, net (15,337) (319) (8) — — (15,664) — (15,664) Loss on extinguishment of debt (857) (2,101) — (194) (1,472) (4,624) — (4,624) Other loss, net — (50) — — — (50) — (50) Total other income (loss) 12,309 (2,604) 6,115 59,349 5,317 80,486 38,942 119,428 Income (loss) before income taxes 115,158 2,235 9,365 84,458 (56,838) 154,378 136 154,514 Income tax (provision) benefit (3,194) 475 — (1,794) — (4,513) — (4,513) Net income (loss) 111,964 2,710 9,365 82,664 (56,838) 149,865 136 150,001 Net income attributable to non-controlling interests — — (5,250) (4,219) — (9,469) (136) (9,605) Net income (loss) attributable to Starwood Property Trust, Inc . $ 111,964 $ 2,710 $ 4,115 $ 78,445 $ (56,838) $ 140,396 $ — $ 140,396 The table below presents our results of operations for the nine months ended September 30, 2020 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 492,489 $ 59,374 $ — $ 6,071 $ — $ 557,934 $ — $ 557,934 Interest income from investment securities 57,358 2,019 — 73,311 — 132,688 (90,618) 42,070 Servicing fees 424 — — 28,782 — 29,206 (8,207) 20,999 Rental income 2,782 — 191,452 28,600 — 222,834 — 222,834 Other revenues 298 344 228 891 — 1,761 (5) 1,756 Total revenues 553,351 61,737 191,680 137,655 — 944,423 (98,830) 845,593 Costs and expenses: Management fees 987 — — 680 85,257 86,924 46 86,970 Interest expense 134,243 31,709 49,243 18,796 83,670 317,661 (162) 317,499 General and administrative 29,230 12,328 3,453 54,490 11,105 110,606 251 110,857 Acquisition and investment pursuit costs 2,195 1,179 12 (3) — 3,383 — 3,383 Costs of rental operations 2,409 — 71,857 13,102 — 87,368 — 87,368 Depreciation and amortization 1,275 246 57,571 11,890 — 70,982 — 70,982 Credit loss provision, net 52,293 2,991 — — — 55,284 — 55,284 Other expense 230 — 432 — — 662 — 662 Total costs and expenses 222,862 48,453 182,568 98,955 180,032 732,870 135 733,005 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 64,353 64,353 Change in fair value of servicing rights — — — 9,606 — 9,606 (11,934) (2,328) Change in fair value of investment securities, net (8,814) — — (36,026) — (44,840) 47,972 3,132 Change in fair value of mortgage loans, net 56,895 — — 22,805 — 79,700 — 79,700 Earnings (loss) from unconsolidated entities 3,975 (1,198) — 30,504 — 33,281 (1,216) 32,065 (Loss) gain on sale of investments and other assets, net (961) 296 — 7,433 — 6,768 — 6,768 (Loss) gain on derivative financial instruments, net (9,508) (1,328) (35,150) (22,896) 34,397 (34,485) — (34,485) Foreign currency (loss) gain, net (1,757) (53) (53) 2 — (1,861) — (1,861) Loss on extinguishment of debt (22) (170) (2,185) — — (2,377) — (2,377) Other income, net — — 240 447 — 687 — 687 Total other income (loss) 39,808 (2,453) (37,148) 11,875 34,397 46,479 99,175 145,654 Income (loss) before income taxes 370,297 10,831 (28,036) 50,575 (145,635) 258,032 210 258,242 Income tax (provision) benefit (15,535) 3 — 8,716 — (6,816) — (6,816) Net income (loss) 354,762 10,834 (28,036) 59,291 (145,635) 251,216 210 251,426 Net income attributable to non-controlling interests (10) — (15,294) (11,191) — (26,495) (210) (26,705) Net income (loss) attributable to Starwood Property Trust, Inc . $ 354,752 $ 10,834 $ (43,330) $ 48,100 $ (145,635) $ 224,721 $ — $ 224,721 The table below presents our results of operations for the nine months ended September 30, 2019 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 $ 462,956 $ 74,969 $ — $ 8,987 $ — $ 546,912 $ — $ 546,912 Interest income from investment securities 62,438 2,563 — 88,012 — 153,013 (96,160) 56,853 Servicing fees 310 — — 61,366 — 61,676 (13,902) 47,774 Rental income — — 215,098 40,686 — 255,784 — 255,784 Other revenues 714 732 291 929 26 2,692 (24) 2,668 Total revenues 526,418 78,264 215,389 199,980 26 1,020,077 (110,086) 909,991 Costs and expenses: Management fees 1,127 — — 54 74,924 76,105 122 76,227 Interest expense 172,012 49,257 57,142 25,152 84,878 388,441 (487) 387,954 General and administrative 20,626 13,624 5,394 61,943 10,429 112,016 258 112,274 Acquisition and investment pursuit costs 915 51 — (387) — 579 — 579 Costs of rental operations 1,525 — 70,846 19,503 — 91,874 — 91,874 Depreciation and amortization 695 15 70,078 15,287 — 86,075 — 86,075 Credit loss provision, net 2,046 1,196 — — — 3,242 — 3,242 Other expense 230 — 1,353 194 — 1,777 — 1,777 Total costs and expenses 199,176 64,143 204,813 121,746 170,231 760,109 (107) 760,002 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 164,761 164,761 Change in fair value of servicing rights — — — (1,617) — (1,617) (691) (2,308) Change in fair value of investment securities, net (2,945) — — 56,431 — 53,486 (52,491) 995 Change in fair value of mortgage loans, net 16,837 — — 48,841 — 65,678 — 65,678 Earnings (loss) from unconsolidated entities 8,576 — (42,538) 3,601 — (30,361) (1,275) (31,636) Gain on sale of investments and other assets, net 3,476 3,041 — 21,640 — 28,157 — 28,157 Gain (loss) on derivative financial instruments, net 12,024 (3,337) (3,957) (16,761) 31,725 19,694 — 19,694 Foreign currency loss, net (17,025) (102) (7) — — (17,134) — (17,134) Loss on extinguishment of debt (857) (8,221) — (194) (1,466) (10,738) — (10,738) Other loss, net — (50) — — (73) (123) — (123) Total other income (loss) 20,086 (8,669) (46,502) 111,941 30,186 107,042 110,304 217,346 Income (loss) before income taxes 347,328 5,452 (35,926) 190,175 (140,019) 367,010 325 367,335 Income tax (provision) benefit (4,778) 746 (258) (4,090) — (8,380) — (8,380) Net income (loss) 342,550 6,198 (36,184) 186,085 (140,019) 358,630 325 358,955 Net income attributable to non-controlling interests (392) — (16,322) (4,121) — (20,835) (325) (21,160) Net income (loss) attributable to Starwood Property Trust, Inc . $ 342,158 $ 6,198 $ (52,506) $ 181,964 $ (140,019) $ 337,795 $ — $ 337,795 The table below presents our condensed consolidated balance sheet as of September 30, 2020 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 19,111 $ 994 $ 38,119 $ 22,054 $ 298,844 $ 379,122 $ 748 $ 379,870 Restricted cash 69,351 31,515 7,632 22,838 — 131,336 — 131,336 Loans held-for-investment, net 9,373,503 1,544,068 — 1,081 — 10,918,652 — 10,918,652 Loans held-for-sale 747,654 — — 265,019 — 1,012,673 — 1,012,673 Investment securities 1,152,362 39,813 — 1,097,322 — 2,289,497 (1,544,384) 745,113 Properties, net 27,123 — 1,983,124 197,575 — 2,207,822 — 2,207,822 Intangible assets — — 41,946 70,374 — 112,320 (38,181) 74,139 Investment in unconsolidated entities 50,850 24,664 — 45,236 — 120,750 (16,366) 104,384 Goodwill — 119,409 — 140,437 — 259,846 — 259,846 Derivative assets 25,805 — 54 1,250 37,716 64,825 — 64,825 Accrued interest receivable 72,344 3,244 — 334 3,484 79,406 (1,376) 78,030 Other assets 24,705 4,216 70,369 52,352 11,829 163,471 3 163,474 VIE assets, at fair value — — — — — — 64,477,475 64,477,475 Total Assets $ 11,562,808 $ 1,767,923 $ 2,141,244 $ 1,915,872 $ 351,873 $ 17,739,720 $ 62,877,919 $ 80,617,639 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 36,378 $ 8,545 $ 49,758 $ 35,796 $ 70,956 $ 201,433 $ 58 $ 201,491 Related-party payable — — — 5 22,091 22,096 — 22,096 Dividends payable — — — — 138,264 138,264 — 138,264 Derivative liabilities 8,839 1,516 — 3,097 — 13,452 — 13,452 Secured financing agreements, net 5,576,092 1,243,001 1,793,731 614,055 389,013 9,615,892 — 9,615,892 Collateralized loan obligations, net 929,931 — — — — 929,931 — 929,931 Unsecured senior notes, net — — — — 1,934,555 1,934,555 — 1,934,555 VIE liabilities, at fair value — — — — — — 62,876,265 62,876,265 Total Liabilities 6,551,240 1,253,062 1,843,489 652,953 2,554,879 12,855,623 62,876,323 75,731,946 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — 2,918 2,918 — 2,918 Additional paid-in capital 1,165,764 509,848 115,246 (124,805) 3,534,663 5,200,716 — 5,200,716 Treasury stock — — — — (133,024) (133,024) — (133,024) Accumulated other comprehensive income (loss) 42,350 — — (65) — 42,285 — 42,285 Retained earnings (accumulated deficit) 3,803,336 5,013 (42,898) 1,243,098 (5,607,563) (599,014) — (599,014) Total Starwood Property Trust, Inc. Stockholders’ Equity 5,011,450 514,861 72,348 1,118,228 (2,203,006) 4,513,881 — 4,513,881 Non-controlling interests in consolidated subsidiaries 118 — 225,407 144,691 — 370,216 1,596 371,812 Total Equity 5,011,568 514,861 297,755 1,262,919 (2,203,006) 4,884,097 1,596 4,885,693 Total Liabilities and Equity $ 11,562,808 $ 1,767,923 $ 2,141,244 $ 1,915,872 $ 351,873 $ 17,739,720 $ 62,877,919 $ 80,617,639 The table below presents our condensed consolidated balance sheet as of December 31, 2019 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 $ 26,278 $ 2,209 $ 30,123 $ 61,693 $ 356,864 $ 477,167 $ 1,221 $ 478,388 Restricted cash 36,135 41,967 7,171 10,370 — 95,643 — 95,643 Loans held-for-investment, net 9,187,332 1,397,448 — 1,294 — 10,586,074 — 10,586,074 Loans held-for-sale 605,384 119,528 — 159,238 — 884,150 — 884,150 Investment securities 992,974 45,153 — 1,177,148 — 2,215,275 (1,405,037) 810,238 Properties, net 26,834 — 2,029,024 210,582 — 2,266,440 — 2,266,440 Intangible assets — — 47,303 64,644 — 111,947 (26,247) 85,700 Investment in unconsolidated entities 46,921 25,862 — 32,183 — 104,966 (20,637) 84,329 Goodwill — 119,409 — 140,437 — 259,846 — 259,846 Derivative assets 14,718 7 3 7 14,208 28,943 — 28,943 Accrued interest receivable 45,996 3,134 133 2,388 13,242 64,893 (806) 64,087 Other assets 59,170 6,101 82,910 54,238 8,911 211,330 (7) 211,323 VIE assets, at fair value — — — — — — 62,187,175 62,187,175 Total Assets $ 11,041,742 $ 1,760,818 $ 2,196,667 $ 1,914,222 $ 393,225 $ 17,306,674 $ 60,735,662 $ 78,042,336 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 30,594 $ 6,443 $ 48,370 $ 73,021 $ 53,494 $ 211,922 $ 84 $ 212,006 Related-party payable — — — 5 40,920 40,925 — 40,925 Dividends payable — — — — 137,427 137,427 — 137,427 Derivative liabilities 7,698 750 — 292 — 8,740 — 8,740 Secured financing agreements, net 5,038,876 1,217,066 1,698,334 574,507 391,215 8,919,998 (13,950) 8,906,048 Collateralized loan obligations, net 928,060 — — — — 928,060 — 928,060 Unsecured senior notes, net — — — — 1,928,622 1,928,622 — 1,928,622 VIE liabilities, at fair value — — — — — — 60,743,494 60,743,494 Total Liabilities 6,005,228 1,224,259 1,746,704 647,825 2,551,678 12,175,694 60,729,628 72,905,322 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — 2,874 2,874 — 2,874 Additional paid-in capital 1,522,360 529,668 208,650 (123,210) 2,995,064 5,132,532 — 5,132,532 Treasury stock — — — — (104,194) (104,194) — (104,194) Accumulated other comprehensive income (loss) 50,996 — — (64) — 50,932 — 50,932 Retained earnings (accumulated deficit) 3,463,158 6,891 5,431 1,194,998 (5,052,197) (381,719) — (381,719) Total Starwood Property Trust, Inc. Stockholders’ Equity 5,036,514 536,559 214,081 1,071,724 (2,158,453) 4,700,425 — 4,700,425 Non-controlling interests in consolidated subsidiaries — — 235,882 194,673 — 430,555 6,034 436,589 Total Equity 5,036,514 536,559 449,963 1,266,397 (2,158,453) 5,130,980 6,034 5,137,014 Total Liabilities and Equity $ 11,041,742 $ 1,760,818 $ 2,196,667 $ 1,914,222 $ 393,225 $ 17,306,674 $ 60,735,662 $ 78,042,336 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 23. Subsequent Events Our significant events subsequent to September 30, 2020 were as follows: Unsecured Senior Notes In November 2020, we issued $300.0 million of 5.50% Senior Notes due 2023 which mature on November 1, 2023. Secured Financing Agreements In October 2020, we amended a Term Loan facility to increase borrowings by $250.0 million to $646.0 million. The Term Loan increase carries a six-year term and an annual interest rate of LIBOR + 3.50%. The proceeds were used to redeem a portion of our $500.0 million senior notes due February 2021. In October 2020, we entered into a Residential repurchase facility to finance residential loans. The facility carries a rolling 18-month %. The maximum facility size is $350.0 million. Commercial Mortgage Loan Securitization In October 2020, we received proceeds of $253.0 million from the securitization of $231.8 million of commercial loans. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2019 (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, 2020 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, 2019 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, we have financed a pool of our loans through a collateralized loan obligation (“CLO”) which is considered a VIE. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership 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 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 non-performance 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 1% of our consolidated securitization VIE assets, with the remaining 99 % 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 We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. 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 residential mortgage loans held-for-investment were made in order to maintain consistency across all our residential mortgage loans. 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. |
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 credit deteriorated or we have elected to apply the fair value option at purchase. |
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. |
Credit Losses | Credit Losses Loans and Debt Securities Measured at Amortized Cost ASC 326, Financial Instruments – Credit Losses , became effective for the Company on January 1, 2020. ASC 326 mandates the use of a current expected credit loss model (“CECL”) for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under GAAP. The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to our loans held-for-investment (“HFI”) and our held-to-maturity (“HTM”) debt securities which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities. However, as permitted by ASC 326, we have elected not to measure an allowance for credit losses on accrued interest receivable (which is classified separately on our condensed consolidated balance sheet), but rather write off in a timely manner by reversing interest income and/or cease accruing interest that would likely be uncollectible. Our adoption of the CECL model resulted in a As we do not have a history of realized credit losses on our HFI loans and HTM securities, we have subscribed to third party database services to provide us with historical industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios. See Note 4 for further discussion of our methodologies. We also evaluate each loan and security measured at amortized cost for credit deterioration at least quarterly. Credit deterioration 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 or security. If a loan or security is considered to be credit deteriorated, we depart from the industry loss rate approach described above and determine the credit loss allowance as any excess of the amortized cost basis of the loan or security over (i) the present value of expected future cash flows discounted at the contractual effective interest rate or (ii) the fair value of the collateral, if repayment is expected solely from the collateral. Available-for-Sale Debt Securities Separate provisions of ASC 326 apply to our available-for-sale (“AFS”) debt securities, which are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (“AOCI”). We are required to establish an initial credit loss allowance for those securities that are purchased with credit deterioration (“PCD”) by grossing up the amortized cost basis of each security and providing an offsetting credit loss allowance for the difference between expected cash flows and contractual cash flows, both on a present value basis. As of the January 1, 2020 effective date, no such credit loss allowance gross-up was required on our AFS debt securities with PCD due to their individual unrealized gain positions as of that date. Subsequently, cumulative adverse changes in expected cash flows on our AFS debt securities are recognized currently as an increase to the allowance for credit losses. However, the allowance is limited to the amount by which the AFS debt security’s amortized cost exceeds its fair value. Favorable changes in expected cash flows are first recognized as a decrease to the allowance for credit losses (recognized currently in earnings). Such changes would be recognized as a prospective yield adjustment only when the allowance for credit losses is reduced to zero. A change in expected cash flows that is attributable solely to a change in a variable interest reference rate does not result in a credit loss and is accounted for as a prospective yield adjustment. |
Goodwill | Goodwill ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment |
Revenue Recognition | Revenue Recognition Interest Income 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. Such excess, if any, is recognized as interest income on a level-yield basis over the life of the loan. Servicing Fees We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met. Rental Income Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor. |
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 (the “Convertible 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, 2020 and 2019, 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. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our investments, which has a significant impact on the amount of income 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. In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 200 countries and territories, including every state in the U.S and in cities and regions where our corporate headquarters and/or properties that secure our investments, or properties that we own, are located, and is continuing to spread. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and since then, numerous countries, including the U.S., have declared national emergencies with respect to COVID-19 and have instituted “stay-at-home” guidelines or orders to help prevent its spread. Such actions are creating disruption in global supply chains, increasing rates of unemployment and adversely impacting many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2020. However, uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and our business in particular, makes any estimates and assumptions as of September 30, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates. |
Recent Accounting Developments | Recent Accounting Developments Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting, On August 5, 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40), removes certain separation models for convertible debt instruments and convertible preferred stock that require the separation into a debt component and an equity or derivative component. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives and the convertible instruments are not issued with substantial premiums accounted for as paid-in capital. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. ASU 2020-06 also revises the derivative scope exception for contracts in an entity’s own equity and improves the consistency of EPS calculations. This ASU is effective for larger public business entities’ annual periods, and interim periods therein, beginning after December 15, 2021. Early application is permitted for fiscal years beginning after December 15, 2020. We expect to early adopt this ASU effective January 1, 2021 through the modified retrospective method of transition, resulting in a cumulative adjustment to our beginning accumulated deficit as of that date related to our outstanding Convertible Notes. We do not expect the application of this ASU, including the cumulative adjustment upon adoption, to materially impact our consolidated financial statements. |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Loans | |
Summary of investments in mortgages and loans by subordination class | The following tables summarize our investments in mortgages and loans as of September 30, 2020 and December 31, 2019 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) September 30, 2020 Value Amount Coupon (1) (years)(2) Loans held-for-investment: Commercial loans: First mortgages (3) $ 8,525,273 $ 8,548,916 5.3 % 1.6 Subordinated mortgages (4) 69,835 70,979 8.8 % 3.0 Mezzanine loans (3) 588,116 587,223 10.3 % 1.6 Other 30,548 34,043 8.9 % 2.0 Total commercial loans 9,213,772 9,241,161 Infrastructure first priority loans (6) 1,558,220 1,578,030 4.2 % 4.3 Residential mortgage loans, fair value option (5) 256,407 249,323 6.2 % 3.4 Total loans held-for-investment 11,028,399 11,068,514 Loans held-for-sale: Residential, fair value option (5) 747,654 742,106 6.0 % 3.4 Commercial, fair value option 265,019 266,370 4.1 % 10.0 Total loans held-for-sale 1,012,673 1,008,476 Total gross loans 12,041,072 $ 12,076,990 Credit loss allowances: Commercial loans held-for-investment (95,595) Infrastructure loans held-for-investment (14,152) Total allowances (109,747) Total net loans $ 11,931,325 December 31, 2019 Loans held-for-investment: Commercial loans: First mortgages (3) $ 7,928,026 $ 7,962,788 5.8 % 2.0 Subordinated mortgages (4) 75,724 77,055 8.8 % 3.4 Mezzanine loans (3) 484,164 484,408 11.0 % 1.9 Other 62,555 66,525 8.2 % 1.6 Total commercial loans 8,550,469 8,590,776 Infrastructure first priority loans 1,397,448 1,416,164 5.6 % 4.9 Residential mortgage loans, fair value option 671,572 654,925 6.1 % 3.8 Total loans held-for-investment 10,619,489 10,661,865 Loans held-for-sale: Residential, fair value option 605,384 587,144 6.2 % 3.9 Commercial, fair value option 159,238 160,635 3.9 % 10.0 Infrastructure, lower of cost or fair value 119,724 121,271 3.3 % 2.1 Total loans held-for-sale 884,346 869,050 Total gross loans 11,503,835 $ 11,530,915 Credit loss allowances: Commercial loans held-for-investment (33,415) Infrastructure loans held-for-investment — Total held-for-investment allowances (33,415) Infrastructure loans held-for-sale with a fair value allowance (196) Total allowances (33,611) Total net loans $ 11,470,224 (1) Calculated using LIBOR or other applicable index rates as of September 30, 2020 and December 31, 2019 for variable rate loans. (2) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition. (3) 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 $896.8 million and $967.0 million being classified as first mortgages as of September 30, 2020 and December 31, 2019, respectively. (4) 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. (5) During the nine months ended September 30, 2020, $422.7 million of residential loans held-for-investment were reclassified into loans held-for-sale. (6) During the nine months ended September 30, 2020, $104.3 million of infrastructure loans held-for-sale were reclassified into loans held-for-investment and $26.3 million of infrastructure loans held-for-investment were reclassified into loans held-for-sale. |
Summary of variable rate loans held-for-investment | As of September 30, 2020, our variable rate loans held-for-investment were as follows (dollars in thousands): Carrying Weighted-average September 30, 2020 Value Spread Above Index Commercial loans $ 8,568,112 4.2 % Infrastructure loans 1,558,220 3.8 % Total variable rate loans held-for-investment $ 10,126,332 4.1 % |
Schedule of risk ratings by class of loan | The significant credit quality indicators for our loans measured at amortized cost, which excludes loans held-for-sale, were as follows as of September 30, 2020 (dollars in thousands): Term Loans Revolving Loans Total Credit Amortized Cost Basis by Origination Year Amortized Cost Amortized Loss As of September 30, 2020 2020 2019 2018 2017 2016 Prior Total Cost Basis Allowance Commercial loans: Credit quality indicator: LTV < 60% $ 618,232 $ 1,084,103 $ 977,021 $ 1,031,872 $ 154,198 $ 215,747 $ — $ 4,081,173 $ 11,751 LTV 60% - 70% 138,058 1,469,532 1,653,299 35,931 53,450 191,211 — 3,541,481 35,691 LTV > 70% 384,045 582,334 243,452 140,914 — 75,250 — 1,425,995 18,300 Credit deteriorated — — 28,986 7,755 — 105,589 — 142,330 29,853 Defeased and other — — — — — 22,793 — 22,793 — Total commercial $ 1,140,335 $ 3,135,969 $ 2,902,758 $ 1,216,472 $ 207,648 $ 610,590 $ — $ 9,213,772 $ 95,595 Infrastructure loans: Credit quality indicator: Power $ — $ 246,675 $ 300,909 $ 148,159 $ 188,331 $ 312,176 $ 23,413 $ 1,219,663 $ 7,692 Oil and gas — 234,119 102,822 — — — 1,616 338,557 6,460 Total infrastructure $ — $ 480,794 $ 403,731 $ 148,159 $ 188,331 $ 312,176 $ 25,029 $ 1,558,220 $ 14,152 Residential loans held-for-investment, fair value option 256,407 — Loans held-for-sale 1,012,673 — Total gross loans $ 12,041,072 $ 109,747 |
Schedule of activity in allowance for loan losses | The following tables present the activity in our credit loss allowance for funded loans and unfunded commitments (amounts in thousands): Funded Commitments Credit Loss Allowance Loans Loans Held-for-Investment Held-for-Sale Total Nine Months Ended September 30, 2020 Commercial Infrastructure Infrastructure Funded Loans Credit loss allowance at December 31, 2019 $ 33,415 $ — $ 196 $ 33,611 Cumulative effect of ASC 326 effective January 1, 2020 10,112 10,328 — 20,440 Credit loss provision (reversal), net 53,110 3,824 (125) 56,809 Charge-offs (1,042) — (71) (1,113) Recoveries — — — — Credit loss allowance at September 30, 2020 $ 95,595 $ 14,152 $ — $ 109,747 Unfunded Commitments Credit Loss Allowance (1) Loans Held-for-Investment HTM Preferred Nine Months Ended September 30, 2020 Commercial Infrastructure Interests (2) Total Credit loss allowance at December 31, 2019 $ — $ — $ — $ — Cumulative effect of ASC 326 effective January 1, 2020 8,348 2,205 — 10,553 Credit loss reversal, net (3,156) (664) — (3,820) Credit loss allowance at September 30, 2020 $ 5,192 $ 1,541 $ — $ 6,733 Memo: Unfunded commitments as of September 30, 2020 (3) $ 1,630,823 $ 95,421 $ — $ 1,726,244 (1) Included in accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheet. (2) See Note 5 for further details. (3) Represents amounts expected to be funded (see Note 21). |
Schedule of activity in loan portfolio | The activity in our loan portfolio was as follows (amounts in thousands): Held-for-Investment Loans Nine Months Ended September 30, 2020 Commercial Infrastructure Residential Held-for-Sale Loans Total Loans Balance at December 31, 2019 $ 8,517,054 $ 1,397,448 $ 671,572 $ 884,150 $ 11,470,224 Cumulative effect of ASC 326 effective January 1, 2020 (10,112) (10,328) — — (20,440) Acquisitions/originations/additional funding 2,090,964 177,247 100,720 1,800,018 4,168,949 Capitalized interest (1) 105,329 48 — — 105,377 Basis of loans sold (2) (397,038) — (604) (2,035,770) (2,433,412) Loan maturities/principal repayments (1,148,317) (96,150) (76,025) (75,632) (1,396,124) Discount accretion/premium amortization 28,686 1,672 — 110 30,468 Changes in fair value — — (16,565) 96,265 79,700 Unrealized foreign currency translation loss (15,279) (38) — (1,291) (16,608) Credit loss (provision) reversal, net (53,110) (3,824) — 125 (56,809) Transfer to/from other asset classifications — 77,993 (422,691) 344,698 — Balance at September 30, 2020 $ 9,118,177 $ 1,544,068 $ 256,407 $ 1,012,673 $ 11,931,325 Loans Transferred Held-for-Investment Loans As Secured Nine Months Ended September 30, 2019 Commercial Infrastructure Held-for-Sale Loans Borrowings Total Loans Balance at December 31, 2018 $ 7,075,577 $ 1,456,779 $ 1,187,552 $ 74,346 $ 9,794,254 Acquisitions/originations/additional funding 2,489,120 387,599 2,731,110 — 5,607,829 Capitalized interest (1) 79,869 — — — 79,869 Basis of loans sold (2) (548,329) — (2,164,908) — (2,713,237) Loan maturities/principal repayments (1,695,388) (563,736) (95,262) (74,692) (2,429,078) Discount accretion/premium amortization 22,674 1,173 — 346 24,193 Changes in fair value 1,496 — 64,182 — 65,678 Unrealized foreign currency translation (loss) gain (37,473) — 282 — (37,191) Credit loss provision, net (2,046) — (1,196) — (3,242) Loan foreclosures (27,303) — — — (27,303) Transfer to/from other asset classifications 279,641 — (279,641) — — Balance at September 30, 2019 $ 7,637,838 $ 1,281,815 $ 1,442,119 $ — $ 10,361,772 (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, 2020 | |
Schedule of investment securities | Investment securities were comprised of the following as of September 30, 2020 and December 31, 2019 (amounts in thousands): Carrying Value as of September 30, 2020 December 31, 2019 RMBS, available-for-sale $ 170,270 $ 189,576 RMBS, fair value option (1) 373,682 147,034 CMBS, fair value option (1), (2) 1,194,191 1,295,363 HTM debt securities, amortized cost net of credit loss allowance of $6,425 and $0 541,296 570,638 Equity security, fair value 10,058 12,664 Subtotal — 2,289,497 2,215,275 VIE eliminations (1) (1,544,384) (1,405,037) Total investment securities $ 745,113 $ 810,238 (1) Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810. (2) Includes $178.6 million and $186.6 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of September 30, 2020 and December 31, 2019, respectively. |
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 Securitization available-for-sale value option value option Securities VIEs (1) Total Three Months Ended September 30, 2020 Purchases/fundings $ — $ 43,083 $ — $ 6,288 $ (43,083) $ 6,288 Principal collections 6,063 12,132 8,265 11,203 (20,185) 17,478 Three Months Ended September 30, 2019 Purchases $ — $ 52,845 $ 10,214 $ — $ (57,894) $ 5,165 Sales — — 49,725 — (49,725) — Principal collections 7,445 4,680 15,859 35,069 (17,196) 45,857 RMBS, RMBS, fair CMBS, fair HTM Securitization available-for-sale value option value option Securities VIEs (1) Total Nine Months Ended September 30, 2020 Purchases/fundings $ — $ 257,808 $ 7,661 $ 22,408 $ (265,469) $ 22,408 Sales — — 32,316 — (24,376) 7,940 Principal collections 18,626 32,236 25,715 48,554 (57,174) 67,957 Nine Months Ended September 30, 2019 Purchases $ — $ 79,117 $ 62,427 $ — $ (136,379) $ 5,165 Sales — 41,501 112,426 — (149,949) 3,978 Principal collections 20,222 9,772 37,768 89,737 (38,607) 118,892 (1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as issuance or repayment of debt of, or distributions from, consolidated VIEs in our condensed consolidated statements of cash flows. |
Summary of investments in available-for-sale RMBS | The tables below summarize various attributes of our investments in available-for-sale RMBS as of September 30, 2020 and December 31, 2019 (amounts in thousands): Unrealized Gains or (Losses) Recognized in AOCI Credit Gross Gross Net Amortized Loss Net Unrealized Unrealized Fair Value Cost Allowance Basis Gains Losses Adjustment Fair Value September 30, 2020 RMBS $ 127,921 $ — $ 127,921 $ 42,523 $ (174) $ 42,349 $ 170,270 December 31, 2019 RMBS $ 138,580 N/A $ 138,580 $ 51,310 $ (314) $ 50,996 $ 189,576 Weighted Average Coupon (1) Weighted Average WAL September 30, 2020 RMBS 1.5 % B+ 5.7 December 31, 2019 RMBS 3.1 % BB- 5.6 (1) Calculated using the September 30, 2020 and December 31, 2019 one-month LIBOR rate of 0.1483% and 1.763%, 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. |
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, 2020 and December 31, 2019, and for which an allowance for credit losses has not been recorded (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, 2020 RMBS $ 412 $ 1,194 $ (45) $ (129) As of December 31, 2019 RMBS $ — $ 1,380 $ — $ (314) |
Held-to-maturity | |
Summary of investments in HTM securities | The table below summarizes our investments in HTM debt securities as of September 30, 2020 and December 31, 2019 (amounts in thousands): Amortized Credit Loss Net Carrying Gross Unrealized Gross Unrealized Cost Basis Allowance Amount Holding Gains Holding Losses Fair Value September 30, 2020 CMBS $ 338,984 $ — $ 338,984 $ — $ (23,277) $ 315,707 Preferred interests 165,952 (3,453) 162,499 — (5,550) 156,949 Infrastructure bonds 42,785 (2,972) 39,813 352 (13) 40,152 Total $ 547,721 $ (6,425) $ 541,296 $ 352 $ (28,840) $ 512,808 December 31, 2019 CMBS $ 383,473 $ — $ 383,473 $ 946 $ (3,001) $ 381,418 Preferred interests 142,012 — 142,012 1,148 (353) 142,807 Infrastructure bonds 45,153 — 45,153 — (651) 44,502 Total $ 570,638 $ — $ 570,638 $ 2,094 $ (4,005) $ 568,727 |
Summary of activity in credit loss allowance for HTM debt securities | The following table presents the activity in our credit loss allowance for HTM debt securities (amounts in thousands): Total HTM Preferred Infrastructure Credit Loss Interests Bonds Allowance Nine Months Ended September 30, 2020 Credit loss allowance at December 31, 2019 $ — $ — $ — Cumulative effect of ASC 326 effective January 1, 2020: Beginning accumulated deficit charge 1,114 179 1,293 Gross-up of PCD bond amortized cost basis — 2,837 2,837 Credit loss provision, net 2,339 (44) 2,295 Credit loss allowance at September 30, 2020 $ 3,453 $ 2,972 $ 6,425 |
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 debt securities by type as of September 30, 2020 (amounts in thousands): Preferred Infrastructure CMBS Interests Bonds Total Less than one year $ 268,084 $ — $ 2,632 $ 270,716 One to three years 70,900 141,000 — 211,900 Three to five years — 21,499 — 21,499 Thereafter — — 37,181 37,181 Total $ 338,984 $ 162,499 $ 39,813 $ 541,296 |
Properties (Tables)
Properties (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Properties | |
Summary of properties | The table below summarizes our properties held as of September 30, 2020 and December 31, 2019 (dollars in thousands): Depreciable Life September 30, 2020 December 31, 2019 Property Segment Land and land improvements 0 – 15 years $ 484,722 $ 484,397 Buildings and building improvements 5 – 45 years 1,689,004 1,687,756 Furniture & fixtures 3 – 7 years 57,894 52,567 Investing and Servicing Segment Land and land improvements 0 – 15 years 50,789 54,052 Buildings and building improvements 3 – 40 years 175,676 182,048 Furniture & fixtures 2 – 5 years 2,513 2,139 Commercial and Residential Lending Segment (1) Land and land improvements 0 – 10 years 11,416 11,386 Buildings and building improvements 10 – 23 years 17,424 16,285 Properties, cost 2,489,438 2,490,630 Less: accumulated depreciation (281,616) (224,190) Properties, net $ 2,207,822 $ 2,266,440 (1) Represents properties acquired through loan foreclosure. |
Investment in Unconsolidated _2
Investment in Unconsolidated Entities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investment in Unconsolidated Entities | |
Summary of investments in unconsolidated entities | The table below summarizes our investments in unconsolidated entities as of September 30, 2020 and December 31, 2019 (dollars in thousands): Participation / Carrying value as of Ownership % (1) September 30, 2020 December 31, 2019 Equity method: Retail Fund 33% $ — $ — Equity interest in a natural gas power plant 10% 24,664 25,862 Investor entity which owns equity in an online real estate company 50% 9,382 9,473 Equity interests in commercial real estate 50% 1,742 1,907 Equity interest in and advances to a residential mortgage originator (2) N/A 14,139 12,002 Various 25% - 50% 8,595 8,339 58,522 57,583 Other: Equity interest in a servicing and advisory business (3) 2% 17,584 — Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% 7,659 9,225 Various 0% - 2% 20,619 17,521 45,862 26,746 $ 104,384 $ 84,329 (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) Includes a $4.5 million subordinated loan as of both September 30, 2020 and December 31, 2019. (3) During the year ended December 31, 2019, we received a capital distribution of $8.4 million and our equity interest was reduced to 4% and the carrying value was reduced to zero. During April 2020, we sold 37% of our equity interest for $10.3 million in cash, reducing our interest to 2 %. In connection with the sale, we recognized a gain of $10.3 million. Because the sale represented an observable price change in an orderly transaction, we also increased the value of our remaining investment to reflect its implied fair value. In doing so, we recognized a gain of $17.6 million. These amounts were recognized within earnings (loss) from unconsolidated entities in our condensed consolidated statement of operations during the nine months ended September 30, 2020. |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 and December 31, 2019 (amounts in thousands): As of September 30, 2020 As of December 31, 2019 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ 14,589 $ — $ 14,589 $ 16,917 $ — $ 16,917 In-place lease intangible assets 133,244 (90,318) 42,926 135,293 (84,383) 50,910 Favorable lease intangible assets 24,188 (7,564) 16,624 24,218 (6,345) 17,873 Total net intangible assets $ 172,021 $ (97,882) $ 74,139 $ 176,428 $ (90,728) $ 85,700 |
Summary of activity within intangible assets | The following table summarizes the activity within intangible assets for the nine months ended September 30, 2020 (amounts in thousands): Domestic In-place Lease Favorable Lease Servicing Intangible Intangible Rights Assets Assets Total Balance as of January 1, 2020 $ 16,917 $ 50,910 $ 17,873 $ 85,700 Amortization — (7,814) (1,249) (9,063) Sales — (170) — (170) Changes in fair value due to changes in inputs and assumptions (2,328) — — (2,328) Balance as of September 30, 2020 $ 14,589 $ 42,926 $ 16,624 $ 74,139 |
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): 2020 (remainder of) $ 2,636 2021 9,644 2022 7,862 2023 6,115 2024 4,722 Thereafter 28,571 Total $ 59,550 |
Secured Borrowings (Tables)
Secured Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Secured Borrowings | |
Summary of secured financing agreements | The following table is a summary of our secured financing agreements in place as of September 30, 2020 and December 31, 2019 (dollars in thousands): Outstanding Balance at Current Extended Weighted Average Pledged Asset Maximum September 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2020 2019 Repurchase Agreements: Commercial Loans May 2021 to Aug 2025 (b) May 2023 to Mar 2029 (b) (c) $ 6,643,722 $ 8,747,538 (d) $ 4,556,665 $ 3,640,620 Residential Loans Jun 2022 N/A LIBOR + 2.64% 37,046 400,000 23,866 11,835 Infrastructure Loans Feb 2022 N/A LIBOR + 2.00% 244,862 500,000 206,288 188,198 Conduit Loans Feb 2021 to Jun 2023 Feb 2022 to Jun 2024 LIBOR + 1.93% 171,497 350,000 127,162 86,575 CMBS/RMBS Oct 2020 to Dec 2029 (e) Aug 2021 to Jun 2030 (e) (f) 1,155,313 750,544 634,791 (g) 682,229 Total Repurchase Agreements 8,252,440 10,748,082 5,548,772 4,609,457 Other Secured Financing: Borrowing Base Facility Apr 2022 Apr 2024 LIBOR + 2.25% 50,194 650,000 (h) 37,594 198,955 Commercial Financing Facility Mar 2022 Mar 2029 GBP LIBOR + 1.75% 95,077 76,721 76,721 — Residential Financing Facility Sep 2022 Sep 2025 3.50% — 250,000 — — Infrastructure Acquisition Facility Sep 2021 Sep 2022 (i) 710,572 701,370 572,382 603,642 Infrastructure Financing Facilities Jul 2022 to Oct 2022 Oct 2024 to Jul 2027 LIBOR + 2.11% 583,319 1,250,000 464,487 428,206 Property Mortgages - Fixed rate Nov 2024 to Aug 2052 (j) N/A 4.00% 1,288,513 1,077,800 1,077,800 1,196,492 Property Mortgages - Variable rate Nov 2021 to Jul 2030 N/A (k) 926,495 927,300 908,906 696,503 Term Loan and Revolver (l) N/A (l) N/A (l) 516,000 396,000 399,000 FHLB Feb 2021 N/A 1.99% 948,409 1,600,000 619,500 867,870 Total Other Secured Financing 4,602,579 7,049,191 4,153,390 4,390,668 $ 12,855,019 $ 17,797,273 9,702,162 9,000,125 Unamortized net discount (9,908) (8,347) Unamortized deferred financing costs (76,362) (85,730) $ 9,615,892 $ 8,906,048 (a) Subject to certain conditions as defined in the respective facility agreement. (b) For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions. (c) Certain facilities with an outstanding balance of $1.3 billion as of September 30, 2020 are indexed to GBP LIBOR and EURIBOR. The remainder have a weighted average rate of LIBOR + 2.02%. (d) The aggregate initial maximum facility size of $8.7 billion may be increased at our option, subject to certain conditions. This amount includes such upsizes. (e) Certain facilities with an outstanding balance of $285.9 million as of September 30, 2020 carry a rolling 11-month or 12-month term which may reset monthly or quarterly with the lender's consent. These facilities carry no maximum facility size. (f) A facility with an outstanding balance of $184.2 million as of September 30, 2020 has a fixed annual interest rate of 3.50 %. All other facilities are variable rate with a weighted average rate of LIBOR + 1.57%. (g) Includes: (i) $184.2 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $41.3 million outstanding on one of our repurchase facilities that represents the 49 % pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 14). (h) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (i) Consists of an annual interest rate of the applicable currency benchmark index + 2.00%. (j) The weighted average maturity is 7.0 years as of September 30, 2020. (k) Includes a $600.0 million first mortgage and mezzanine loan secured by our Medical Office Portfolio. This debt has a weighted average interest rate of LIBOR + 2.07% that we swapped to a fixed rate of 3.34%. The remainder have a weighted average rate of LIBOR + 2.63%. (l) Consists of: (i) a $396.0 million term loan facility that matures in July 2026 with an annual interest rate of LIBOR + 2.50%; and (ii) a $120.0 million revolving credit facility that matures in July 2024 with an annual interest rate of LIBOR + 3.00%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $3.7 billion as of September 30, 2020. |
Schedule of collateralized loan obligations | The following table is a summary of our CLO as of September 30, 2020 and December 31, 2019 (amounts in thousands): Face Carrying Weighted September 30, 2020 Count Amount Value Average Spread Maturity Collateral assets 24 $ 1,099,672 $ 1,099,558 LIBOR + 3.83% (a) Feb 2024 (b) Financing 1 936,375 929,931 LIBOR + 1.64% (c) July 2038 (d) December 31, 2019 Collateral assets 20 $ 1,073,504 $ 1,073,504 LIBOR + 3.34% (a) Nov 2023 (b) Financing 1 936,375 928,060 LIBOR + 1.65% (c) July 2038 (d) (a) Represents the weighted-average coupon earned on variable rate loans during the respective year-to-date period. Of the loans financed by the CLO as of September 30, 2020, 9% earned fixed-rate weighted average interest of 6.84%. (b) Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets. (c) Represents the weighted-average cost of financing incurred during the respective year-to-date period, inclusive of deferred issuance costs. (d) Repayments of the CLO are tied to timing of the related collateral asset repayments. The term of the CLO financing obligation represents the legal final maturity date. |
Schedule of five-year principal repayments for secured financings | Repurchase Other Secured Agreements Financing CLO Total 2020 (remainder of) $ 80,429 $ 311,142 $ — $ 391,571 2021 764,290 782,007 — 1,546,297 2022 1,364,073 547,960 — 1,912,033 2023 1,108,155 706,658 — 1,814,813 2024 843,591 235,852 — 1,079,443 Thereafter 1,388,234 1,569,771 936,375 (a) 3,894,380 Total $ 5,548,772 $ 4,153,390 $ 936,375 $ 10,638,537 (a) Assumes utilization of the reinvestment feature. |
Unsecured Senior Notes (Tables)
Unsecured Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 and December 31, 2019 (dollars in thousands): Remaining Coupon Effective Maturity Period of Carrying Value at Rate Rate (1) Date Amortization September 30, 2020 December 31, 2019 2021 Senior Notes (February) 3.63 % (2) 3.89 % 2/1/2021 0.3 years $ 500,000 $ 500,000 2021 Senior Notes (December) 5.00 % 5.32 % 12/15/2021 1.2 years 700,000 700,000 2023 Convertible Notes 4.38 % 4.86 % 4/1/2023 2.5 years 250,000 250,000 2025 Senior Notes 4.75 % (3) 5.04 % 3/15/2025 4.5 years 500,000 500,000 Total principal amount 1,950,000 1,950,000 Unamortized discount—Convertible Notes (2,826) (3,610) Unamortized discount—Senior Notes (8,790) (12,144) Unamortized deferred financing costs (3,829) (5,624) Carrying amount of debt components $ 1,934,555 $ 1,928,622 Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes $ 3,755 $ 3,755 (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our Convertible Notes, the value of which reduced the initial liability and was recorded in additional paid-in-capital. (2) The coupon on the February 2021 Senior Notes is 3.63%. At closing, we swapped the notes to a floating rate of LIBOR + 1.28%. (3) The coupon on the 2025 Senior Notes is 4.75%. At closing, we swapped $470.0 million of the notes to a floating rate of LIBOR + 2.53%. |
Schedule of conversion attributes on Convertible Notes outstanding | The following table details the conversion attributes of our Convertible Notes outstanding as of September 30, 2020: September 30, 2020 Conversion Conversion Rate (1) Price (2) 2023 Convertible Notes 38.5959 $ 25.91 (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, 2020, the market price of the Company’s common stock was $15.09 per share. |
Loan Securitization_Sale Acti_2
Loan Securitization/Sale Activities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investing and Servicing Segment | |
Summary of fair value and par value of loans sold and amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with the loans | Commercial Loans Residential Loans Face Amount Proceeds Face Amount Proceeds For the Three Months Ended September 30, 2020 $ 151,295 $ 157,497 $ 478,911 $ 499,321 2019 262,528 274,714 545,976 569,590 For the Nine Months Ended September 30, 2020 $ 487,130 $ 509,890 $ 1,443,691 $ 1,487,761 2019 787,160 826,932 886,187 921,602 |
Commercial and Residential Lending Segment | |
Summary of loans sold and loans transferred as secured borrowings by the Lending segment net of expenses | Loan Transfers Accounted for as Sales Commercial Residential Face Amount (1) Proceeds (1) Face Amount Proceeds For the Three Months Ended September 30, 2020 $ — $ — $ — $ — 2019 53,288 53,249 1,684 1,743 For the Nine Months Ended September 30, 2020 $ 399,132 $ 396,078 $ 550 $ 604 2019 554,710 551,700 25,526 26,260 (1) During the nine months ended September 30, 2020, we sold $230.9 million and $168.2 million of senior interests in first mortgage loans and whole loan interests, respectively, for proceeds of $224.1 million and $172.0 million, respectively. During the nine months ended September 30, 2019, all sales were of senior interests in first mortgage loans. |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 (notional amounts in thousands): Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity Fx contracts – Buy Euros ("EUR") 1 1,915 EUR November 2022 Fx contracts – Sell EUR 289 250,530 EUR October 2020 – November 2025 Fx contracts – Sell Pounds Sterling ("GBP") 120 373,948 GBP October 2020 – May 2024 Fx contracts – Sell Australian dollar ("AUD") 13 126,546 AUD August 2021 – November 2021 Interest rate swaps – Paying fixed rates 56 1,755,593 USD March 2023 – September 2030 Interest rate swaps – Receiving fixed rates 2 970,000 USD January 2021 - March 2025 Interest rate caps 22 951,462 USD October 2020 – April 2025 Credit index instruments 4 69,000 USD September 2058 – August 2061 Interest rate swap guarantees 6 383,080 USD March 2022 – June 2025 Total 513 |
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, 2020 and December 31, 2019 (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, 2020 2019 2020 2019 Interest rate contracts $ 38,479 $ 14,385 $ 3,097 $ — Interest rate swap guarantees — — 958 614 Foreign exchange contracts 25,805 14,558 9,397 7,834 Credit index instruments 541 — — 292 Total derivatives $ 64,825 $ 28,943 $ 13,452 $ 8,740 (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 for the three and nine months ended September 30, 2020 and 2019 (amounts in thousands): 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 2020 2019 2020 2019 Interest rate contracts (Loss) gain on derivative financial instruments $ 259 $ (7,898) $ (52,129) $ (21,733) Interest rate swap guarantees (Loss) gain on derivative financial instruments 260 (468) (345) (3,640) Foreign exchange contracts (Loss) gain on derivative financial instruments (28,514) 30,426 17,644 46,116 Credit index instruments (Loss) gain on derivative financial instruments (102) (127) 345 (1,049) $ (28,097) $ 21,933 $ (34,485) $ 19,694 |
Offsetting Assets and Liabili_2
Offsetting Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 (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, 2020 Derivative assets $ 64,825 $ — $ 64,825 $ 9,397 $ 39,842 $ 15,586 Derivative liabilities $ 13,452 $ — $ 13,452 $ 9,397 $ 3,097 $ 958 Repurchase agreements 5,548,772 — 5,548,772 5,548,772 — — $ 5,562,224 $ — $ 5,562,224 $ 5,558,169 $ 3,097 $ 958 As of December 31, 2019 Derivative assets $ 28,943 $ — $ 28,943 $ 5,312 $ 14,208 $ 9,423 Derivative liabilities $ 8,740 $ — $ 8,740 $ 5,312 $ 292 $ 3,136 Repurchase agreements 4,609,457 — 4,609,457 4,609,457 — — $ 4,618,197 $ — $ 4,618,197 $ 4,614,769 $ 292 $ 3,136 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities | |
Summary of assets and liabilities of our consolidated CLO | The following table details the assets and liabilities of our consolidated CLO as of September 30, 2020 and December 31, 2019 (amounts in thousands): September 30, 2020 December 31, 2019 Assets: Loans held-for-investment $ 1,099,558 1,073,504 Accrued interest receivable 3,082 3,129 Other assets 328 26,496 Total Assets $ 1,102,968 $ 1,103,129 Liabilities Accounts payable, accrued expenses and other liabilities $ 621 $ 1,362 Collateralized loan obligations, net 929,931 928,060 Total Liabilities $ 930,552 $ 929,422 |
Stockholders' Equity and Non-_2
Stockholders' Equity and Non-Controlling Interests (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity and Non-Controlling Interests | |
Schedule of dividends declared by board of directors | During the nine months ended September 30, 2020, our board of directors declared the following dividends: Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency 9/16/20 9/30/20 9/29/20 10/15/20 $ 0.48 Quarterly 6/16/20 6/30/20 6/29/20 7/15/20 0.48 Quarterly 2/25/20 3/31/20 3/30/20 4/15/20 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 the 2017 Manager Equity Plan during the nine months ended September 30, 2020 and 2019 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period September 2019 RSU 1,200,000 $ 29,484 (1) April 2018 RSU 775,000 16,329 3 years March 2017 RSU 1,000,000 22,240 3 years (1) Of the amount granted, 218,898 vested immediately on the grant date and the remaining amount vests over a three-year period. |
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, 2020 1,413,170 1,305,597 2,718,767 $ 22.74 Granted 1,014,753 — 1,014,753 10.98 Vested (640,727) (522,359) (1,163,086) 22.50 Forfeited (20,960) — (20,960) 14.23 Balance as of September 30, 2020 1,766,236 783,238 2,549,474 18.23 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Basic Earnings Income attributable to STWD common stockholders $ 151,834 $ 140,396 $ 224,721 $ 337,795 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,721) (1,205) (3,422) (2,779) Basic earnings $ 150,113 $ 139,191 $ 221,299 $ 335,016 Diluted Earnings Income attributable to STWD common stockholders $ 151,834 $ 140,396 $ 224,721 $ 337,795 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,721) (1,205) (3,422) (2,779) Add: Interest expense on Convertible Notes (1) 3,055 3,071 * 9,306 Add: Undistributed earnings to participating shares 663 188 — — Less: Undistributed earnings reallocated to participating shares (642) (182) — — Diluted earnings $ 153,189 $ 142,268 $ 221,299 $ 344,322 Number of Shares: Basic — Average shares outstanding 282,596 279,992 281,686 278,934 Effect of dilutive securities — Convertible Notes (1) 9,649 9,649 * 9,857 Effect of dilutive securities — Contingently issuable shares — 38 — 38 Effect of dilutive securities — Unvested non-participating shares 213 233 182 192 Diluted — Average shares outstanding 292,458 289,912 281,868 289,021 Earnings Per Share Attributable to STWD Common Stockholders: Basic $ 0.53 $ 0.50 $ 0.79 $ 1.20 Diluted $ 0.52 $ 0.49 $ 0.79 $ 1.19 (1) The Company does not intend to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the periods presented above 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, 2020 | |
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 (Loss) on Foreign Available-for- Currency Sale Securities Translation Total Three Months Ended September 30, 2020 Balance at July 1, 2020 $ 42,930 $ (64) $ 42,866 OCI before reclassifications (581) — (581) Amounts reclassified from AOCI — — — Net period OCI (581) — (581) Balance at September 30, 2020 $ 42,349 $ (64) $ 42,285 Three Months Ended September 30, 2019 Balance at July 1, 2019 $ 53,049 $ 4,075 $ 57,124 OCI before reclassifications (520) (4,168) (4,688) Amounts reclassified from AOCI (59) — (59) Net period OCI (579) (4,168) (4,747) Balance at September 30, 2019 $ 52,470 $ (93) $ 52,377 Nine Months Ended September 30, 2020 Balance at January 1, 2020 $ 50,996 $ (64) $ 50,932 OCI before reclassifications (8,647) — (8,647) Amounts reclassified from AOCI — — — Net period OCI (8,647) — (8,647) Balance at September 30, 2020 $ 42,349 $ (64) $ 42,285 Nine Months Ended September 30, 2019 Balance at January 1, 2019 $ 53,515 $ 5,145 $ 58,660 OCI before reclassifications (986) (5,238) (6,224) Amounts reclassified from AOCI (59) — (59) Net period OCI (1,045) (5,238) (6,283) Balance at September 30, 2019 $ 52,470 $ (93) $ 52,377 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 and December 31, 2019 (amounts in thousands): September 30, 2020 Total Level I Level II Level III Financial Assets: Loans under fair value option $ 1,269,080 $ — $ — $ 1,269,080 RMBS 170,270 — — 170,270 CMBS 23,489 — 1,640 21,849 Equity security 10,058 10,058 — — Domestic servicing rights 14,589 — — 14,589 Derivative assets 64,825 — 64,825 — VIE assets 64,477,475 — — 64,477,475 Total $ 66,029,786 $ 10,058 $ 66,465 $ 65,953,263 Financial Liabilities: Derivative liabilities $ 13,452 $ — $ 13,452 $ — VIE liabilities 62,876,265 — 60,560,959 2,315,306 Total $ 62,889,717 $ — $ 60,574,411 $ 2,315,306 December 31, 2019 Total Level I Level II Level III Financial Assets: Loans under fair value option $ 1,436,194 $ — $ — $ 1,436,194 RMBS 189,576 — — 189,576 CMBS 37,360 — 12,352 25,008 Equity security 12,664 12,664 — — Domestic servicing rights 16,917 — — 16,917 Derivative assets 28,943 — 28,943 — VIE assets 62,187,175 — 62,187,175 Total $ 63,908,829 $ 12,664 $ 41,295 $ 63,854,870 Financial Liabilities: Derivative liabilities $ 8,740 $ — $ 8,740 $ — VIE liabilities 60,743,494 — 58,206,102 2,537,392 Total $ 60,752,234 $ — $ 58,214,842 $ 2,537,392 |
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, 2020 and 2019 (amounts in thousands): Domestic Loans at Servicing VIE Three Months Ended September 30, 2020 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2020 balance $ 894,613 $ 174,281 $ 21,891 $ 13,955 $ 64,175,387 $ (2,129,529) $ 63,150,598 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 61,384 — (56) 634 (202,560) (30,577) (171,175) Net accretion — 2,633 — — — — 2,633 Included in OCI — (581) — — — — (581) Purchases / Originations 1,013,158 — — — — — 1,013,158 Sales (656,818) — — — — — (656,818) Cash repayments / receipts (43,257) (6,063) (213) — — (329) (49,862) Transfers into Level III — — — — — (485,332) (485,332) Transfers out of Level III — — — — — 322,888 322,888 Consolidation of VIEs — — — — 512,300 — 512,300 Deconsolidation of VIEs — — 227 — (7,652) 7,573 148 September 30, 2020 balance $ 1,269,080 $ 170,270 $ 21,849 $ 14,589 $ 64,477,475 $ (2,315,306) $ 63,637,957 Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: Included in earnings $ 8,864 $ 2,633 $ (56) $ 634 $ (194,147) $ (30,577) $ (212,649) Included in OCI $ — $ (581) $ — $ — $ — $ — $ (581) Domestic Loans at Servicing VIE Three Months Ended September 30, 2019 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2019 balance $ 1,372,398 $ 200,874 $ 34,283 $ 18,874 $ 57,667,606 $ (2,374,002) $ 56,920,033 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 32,512 — 432 (625) (380,973) 28,005 (320,649) Net accretion — 2,446 — — — — 2,446 Included in OCI — (578) — — — — (578) Purchases / Originations 1,123,553 — 5,165 — — — 1,128,718 Sales (846,047) — — — — — (846,047) Issuances — — — — — (22,958) (22,958) Cash repayments / receipts (33,054) (7,445) (3,343) — — (12,516) (56,358) Transfers into Level III — — — — — (122,911) (122,911) Transfers out of Level III (225,813) — — — — 319,727 93,914 Consolidation of VIEs — — — — 1,999,780 (85,450) 1,914,330 Deconsolidation of VIEs — — (657) — (37,359) — (38,016) September 30, 2019 balance $ 1,423,549 $ 195,297 $ 35,880 $ 18,249 $ 59,249,054 $ (2,270,105) $ 58,651,924 Amount of unrealized gains (losses) included in earnings attributable to assets still held at September 30, 2019 $ 4,537 $ 2,390 $ 434 $ (625) $ (380,973) $ 28,005 $ (346,232) Domestic Loans at Servicing VIE Nine Months Ended September 30, 2020 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2020 balance $ 1,436,194 $ 189,576 $ 25,008 $ 16,917 $ 62,187,175 $ (2,537,392) $ 61,317,478 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 79,700 — 5,331 (2,328) (1,291,705) 107,019 (1,101,983) Net accretion — 7,967 — — — — 7,967 Included in OCI — (8,647) — — — — (8,647) Purchases / Originations 1,900,738 — — — — — 1,900,738 Sales (1,998,255) — (7,940) — — — (2,006,195) Issuances — — — — — (24,376) (24,376) Cash repayments / receipts (149,297) (18,626) (777) — — (9,589) (178,289) Transfers into Level III — — — — — (1,242,539) (1,242,539) Transfers out of Level III — — — — — 1,455,093 1,455,093 Consolidation of VIEs — — — — 3,589,657 (71,095) 3,518,562 Deconsolidation of VIEs — — 227 — (7,652) 7,573 148 September 30, 2020 balance $ 1,269,080 $ 170,270 $ 21,849 $ 14,589 $ 64,477,475 $ (2,315,306) $ 63,637,957 Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: Included in earnings $ 8,551 $ 7,967 $ (1,055) $ (2,328) $ (1,213,498) $ 107,019 $ (1,093,344) Included in OCI $ — $ (8,647) $ — $ — $ — $ — $ (8,647) Domestic Loans at Servicing VIE Nine Months Ended September 30, 2019 Fair Value RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2019 balance $ 671,282 $ 209,079 $ 25,228 $ 20,557 $ 53,446,364 $ (1,441,446) $ 52,931,064 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 65,669 — 1,153 (2,308) 39,961 51,907 156,382 Net accretion — 7,484 — — — — 7,484 Included in OCI — (1,044) — — — — (1,044) Purchases / Originations 2,775,787 — 5,165 — — — 2,780,952 Sales (1,774,794) — (3,978) — — — (1,778,772) Issuances — — — — — (81,681) (81,681) Cash repayments / receipts (88,582) (20,222) (8,933) — — (15,786) (133,523) Transfers into Level III — — 5,350 — — (1,374,505) (1,369,155) Transfers out of Level III (225,813) — — — — 750,546 524,733 Consolidation of VIEs — — — — 6,103,915 (193,300) 5,910,615 Deconsolidation of VIEs — — 11,895 — (341,186) 34,160 (295,131) September 30, 2019 balance $ 1,423,549 $ 195,297 $ 35,880 $ 18,249 $ 59,249,054 $ (2,270,105) $ 58,651,924 Amount of total gains (losses) included in earnings attributable to assets still held at September 30, 2019 $ 6,775 $ 7,397 $ 101 $ (2,308) $ 39,961 $ 51,907 $ 103,833 |
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, 2020 December 31, 2019 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment and loans held-for-sale $ 10,662,245 $ 10,583,876 $ 10,034,030 $ 10,086,372 HTM debt securities 541,296 512,808 570,638 568,727 Financial liabilities not carried at fair value: Secured financing agreements and CLO $ 10,545,823 $ 10,495,587 $ 9,834,108 $ 9,826,511 Unsecured senior notes 1,934,555 1,917,805 1,928,622 2,022,283 |
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 (Weighted Average) as of (1) September 30, 2020 Technique Input September 30, 2020 December 31, 2019 Loans under fair value option $ 1,269,080 Discounted cash flow Yield (b) 3.3% - 9.7% (4.7%) 3.4% - 5.9% Duration (c) 1.5 - 10.8 years ( 4.8 years) 1.3 - 11.3 years RMBS 170,270 Discounted cash flow Constant prepayment rate (a) 3.2% - 16.4% (7.3%) 3.1% - 24.9% Constant default rate (b) 1.3% - 5.0% (2.6%) 0.5% - 5.0% Loss severity (b) 0% - 79% (26%) (e) 0% - 93% (e) Delinquency rate (c) 8% - 28% (18%) 5% - 29% Servicer advances (a) 24% - 85% (61%) 27% - 85% Annual coupon deterioration (b) 0.0% - 0.9% (0.1%) 0% - 1.6% Putback amount per projected total collateral loss (d) 0% -25% (1.1%) 0% - 28% CMBS 21,849 Discounted cash flow Yield (b) 0% - 700.5% (6.1%) 0% - 122.9% Duration (c) 0 - 8.9 years ( 5.5 years) 0 - 9.7 years Domestic servicing rights 14,589 Discounted cash flow Debt yield (a) 7.75% (7.75%) 7.50% Discount rate (b) 15% (15%) 15% VIE assets 64,477,475 Discounted cash flow Yield (b) 0% - 751.1% (13.3%) 0% - 690.7% Duration (c) 0 - 19 years ( 3.9 years) 0 - 19.2 years VIE liabilities (2,315,306) Discounted cash flow Yield (b) 0% - 751.1% (13.3%) 0% - 690.7% Duration (c) 0 - 11.0 years ( 3.8 years) 0 - 12.7 years (1) The ranges and weighted averages of significant unobservable inputs are represented in percentages and years. Unobservable inputs were weighted by the relative carrying value of the instruments as of September 30, 2020. Information about Uncertainty of Fair Value Measurements (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) 17% and 34% of the portfolio falls within a range of 45% - 80% as of September 30, 2020 and December 31, 2019, respectively. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 (benefit) provision determined using our statutory federal tax rate to our reported income tax (benefit) provision for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Federal statutory tax rate $ 37,711 21.0 % $ 32,448 21.0 % $ 54,231 21.0 % $ 77,140 21.0 % REIT and other non-taxable loss (24,688) (13.7) % (28,870) (18.7) % (41,697) (16.2) % (71,042) (19.3) % State income taxes 4,278 2.4 % 937 0.6 % 4,118 1.6 % 1,597 0.4 % Federal benefit of state tax deduction (899) (0.5) % (196) (0.1) % (865) (0.3) % (335) (0.1) % Net operating loss carryback rate differential (1,569) (0.9) % — — % (5,286) (2.0) % — — % Intra-entity transfer — — % — — % (3,781) (1.5) % — — % Other 10 — % 194 0.1 % 96 — % 1,020 0.3 % Effective tax rate $ 14,843 8.3 % $ 4,513 2.9 % $ 6,816 2.6 % $ 8,380 2.3 % |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 149,972 $ 17,835 $ — $ 1,597 $ — $ 169,404 $ — $ 169,404 Interest income from investment securities 21,385 635 — 23,587 — 45,607 (33,421) 12,186 Servicing fees 110 — — 13,749 — 13,859 (4,311) 9,548 Rental income 2,014 — 63,925 10,039 — 75,978 — 75,978 Other revenues 66 101 48 98 — 313 (2) 311 Total revenues 173,547 18,571 63,973 49,070 — 305,161 (37,734) 267,427 Costs and expenses: Management fees 297 — — 221 22,596 23,114 13 23,127 Interest expense 38,422 8,914 16,180 5,425 27,040 95,981 — 95,981 General and administrative 12,483 3,568 1,094 18,813 3,436 39,394 84 39,478 Acquisition and investment pursuit costs 757 62 — 65 — 884 — 884 Costs of rental operations 643 — 24,302 4,577 — 29,522 — 29,522 Depreciation and amortization 430 87 19,130 3,934 — 23,581 — 23,581 Credit loss provision (reversal), net 782 (4,369) — — — (3,587) — (3,587) Other expense 77 — 95 — — 172 — 172 Total costs and expenses 53,891 8,262 60,801 33,035 53,072 209,061 97 209,158 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 58,585 58,585 Change in fair value of servicing rights — — — 3,960 — 3,960 (3,326) 634 Change in fair value of investment securities, net 13,611 — — 3,249 — 16,860 (17,059) (199) Change in fair value of mortgage loans, net 59,402 — — 1,982 — 61,384 — 61,384 Earnings (loss) from unconsolidated entities 3,253 (80) — 358 — 3,531 (339) 3,192 (Loss) gain on derivative financial instruments, net (28,577) 110 (313) 38 645 (28,097) — (28,097) Foreign currency gain, net 25,302 110 14 26 — 25,452 — 25,452 Other (loss) income, net — — (1) 358 — 357 — 357 Total other income (loss) 72,991 140 (300) 9,971 645 83,447 37,861 121,308 Income (loss) before income taxes 192,647 10,449 2,872 26,006 (52,427) 179,547 30 179,577 Income tax (provision) benefit (16,700) (86) — 1,943 — (14,843) — (14,843) Net income (loss) 175,947 10,363 2,872 27,949 (52,427) 164,704 30 164,734 Net income attributable to non-controlling interests (3) — (5,072) (7,795) — (12,870) (30) (12,900) Net income (loss) attributable to Starwood Property Trust, Inc . $ 175,944 $ 10,363 $ (2,200) $ 20,154 $ (52,427) $ 151,834 $ — $ 151,834 The table below presents our results of operations for the three months ended September 30, 2019 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 $ 145,290 $ 22,763 $ — $ 3,977 $ — $ 172,030 $ — $ 172,030 Interest income from investment securities 18,163 810 — 32,556 — 51,529 (34,853) 16,676 Servicing fees 97 — — 18,243 — 18,340 (4,007) 14,333 Rental income — — 72,251 12,403 — 84,654 — 84,654 Other revenues 258 39 125 218 — 640 (3) 637 Total revenues 163,808 23,612 72,376 67,397 — 327,193 (38,863) 288,330 Costs and expenses: Management fees 363 — — 18 29,829 30,210 28 30,238 Interest expense 51,844 14,422 19,020 8,891 29,142 123,319 (163) 123,156 General and administrative 7,104 4,315 2,170 22,915 3,184 39,688 78 39,766 Acquisition and investment pursuit costs 506 21 — (364) — 163 — 163 Costs of rental operations 765 — 24,784 6,019 — 31,568 — 31,568 Depreciation and amortization 339 15 23,106 4,809 — 28,269 — 28,269 Credit loss reversal, net (39) — — — — (39) — (39) Other expense 77 — 46 — — 123 — 123 Total costs and expenses 60,959 18,773 69,126 42,288 62,155 253,301 (57) 253,244 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 61,767 61,767 Change in fair value of servicing rights — — — 57 — 57 (682) (625) Change in fair value of investment securities, net (303) — — 22,476 — 22,173 (21,907) 266 Change in fair value of mortgage loans, net 10,088 — — 22,433 — 32,521 — 32,521 Earnings from unconsolidated entities 2,507 — 223 253 — 2,983 (236) 2,747 Gain (loss) on sale of investments and other assets, net 482 (25) — 20,700 — 21,157 — 21,157 Gain (loss) on derivative financial instruments, net 15,729 (109) 5,900 (6,376) 6,789 21,933 — 21,933 Foreign currency loss, net (15,337) (319) (8) — — (15,664) — (15,664) Loss on extinguishment of debt (857) (2,101) — (194) (1,472) (4,624) — (4,624) Other loss, net — (50) — — — (50) — (50) Total other income (loss) 12,309 (2,604) 6,115 59,349 5,317 80,486 38,942 119,428 Income (loss) before income taxes 115,158 2,235 9,365 84,458 (56,838) 154,378 136 154,514 Income tax (provision) benefit (3,194) 475 — (1,794) — (4,513) — (4,513) Net income (loss) 111,964 2,710 9,365 82,664 (56,838) 149,865 136 150,001 Net income attributable to non-controlling interests — — (5,250) (4,219) — (9,469) (136) (9,605) Net income (loss) attributable to Starwood Property Trust, Inc . $ 111,964 $ 2,710 $ 4,115 $ 78,445 $ (56,838) $ 140,396 $ — $ 140,396 The table below presents our results of operations for the nine months ended September 30, 2020 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 492,489 $ 59,374 $ — $ 6,071 $ — $ 557,934 $ — $ 557,934 Interest income from investment securities 57,358 2,019 — 73,311 — 132,688 (90,618) 42,070 Servicing fees 424 — — 28,782 — 29,206 (8,207) 20,999 Rental income 2,782 — 191,452 28,600 — 222,834 — 222,834 Other revenues 298 344 228 891 — 1,761 (5) 1,756 Total revenues 553,351 61,737 191,680 137,655 — 944,423 (98,830) 845,593 Costs and expenses: Management fees 987 — — 680 85,257 86,924 46 86,970 Interest expense 134,243 31,709 49,243 18,796 83,670 317,661 (162) 317,499 General and administrative 29,230 12,328 3,453 54,490 11,105 110,606 251 110,857 Acquisition and investment pursuit costs 2,195 1,179 12 (3) — 3,383 — 3,383 Costs of rental operations 2,409 — 71,857 13,102 — 87,368 — 87,368 Depreciation and amortization 1,275 246 57,571 11,890 — 70,982 — 70,982 Credit loss provision, net 52,293 2,991 — — — 55,284 — 55,284 Other expense 230 — 432 — — 662 — 662 Total costs and expenses 222,862 48,453 182,568 98,955 180,032 732,870 135 733,005 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 64,353 64,353 Change in fair value of servicing rights — — — 9,606 — 9,606 (11,934) (2,328) Change in fair value of investment securities, net (8,814) — — (36,026) — (44,840) 47,972 3,132 Change in fair value of mortgage loans, net 56,895 — — 22,805 — 79,700 — 79,700 Earnings (loss) from unconsolidated entities 3,975 (1,198) — 30,504 — 33,281 (1,216) 32,065 (Loss) gain on sale of investments and other assets, net (961) 296 — 7,433 — 6,768 — 6,768 (Loss) gain on derivative financial instruments, net (9,508) (1,328) (35,150) (22,896) 34,397 (34,485) — (34,485) Foreign currency (loss) gain, net (1,757) (53) (53) 2 — (1,861) — (1,861) Loss on extinguishment of debt (22) (170) (2,185) — — (2,377) — (2,377) Other income, net — — 240 447 — 687 — 687 Total other income (loss) 39,808 (2,453) (37,148) 11,875 34,397 46,479 99,175 145,654 Income (loss) before income taxes 370,297 10,831 (28,036) 50,575 (145,635) 258,032 210 258,242 Income tax (provision) benefit (15,535) 3 — 8,716 — (6,816) — (6,816) Net income (loss) 354,762 10,834 (28,036) 59,291 (145,635) 251,216 210 251,426 Net income attributable to non-controlling interests (10) — (15,294) (11,191) — (26,495) (210) (26,705) Net income (loss) attributable to Starwood Property Trust, Inc . $ 354,752 $ 10,834 $ (43,330) $ 48,100 $ (145,635) $ 224,721 $ — $ 224,721 The table below presents our results of operations for the nine months ended September 30, 2019 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 $ 462,956 $ 74,969 $ — $ 8,987 $ — $ 546,912 $ — $ 546,912 Interest income from investment securities 62,438 2,563 — 88,012 — 153,013 (96,160) 56,853 Servicing fees 310 — — 61,366 — 61,676 (13,902) 47,774 Rental income — — 215,098 40,686 — 255,784 — 255,784 Other revenues 714 732 291 929 26 2,692 (24) 2,668 Total revenues 526,418 78,264 215,389 199,980 26 1,020,077 (110,086) 909,991 Costs and expenses: Management fees 1,127 — — 54 74,924 76,105 122 76,227 Interest expense 172,012 49,257 57,142 25,152 84,878 388,441 (487) 387,954 General and administrative 20,626 13,624 5,394 61,943 10,429 112,016 258 112,274 Acquisition and investment pursuit costs 915 51 — (387) — 579 — 579 Costs of rental operations 1,525 — 70,846 19,503 — 91,874 — 91,874 Depreciation and amortization 695 15 70,078 15,287 — 86,075 — 86,075 Credit loss provision, net 2,046 1,196 — — — 3,242 — 3,242 Other expense 230 — 1,353 194 — 1,777 — 1,777 Total costs and expenses 199,176 64,143 204,813 121,746 170,231 760,109 (107) 760,002 Other income (loss): Change in net assets related to consolidated VIEs — — — — — — 164,761 164,761 Change in fair value of servicing rights — — — (1,617) — (1,617) (691) (2,308) Change in fair value of investment securities, net (2,945) — — 56,431 — 53,486 (52,491) 995 Change in fair value of mortgage loans, net 16,837 — — 48,841 — 65,678 — 65,678 Earnings (loss) from unconsolidated entities 8,576 — (42,538) 3,601 — (30,361) (1,275) (31,636) Gain on sale of investments and other assets, net 3,476 3,041 — 21,640 — 28,157 — 28,157 Gain (loss) on derivative financial instruments, net 12,024 (3,337) (3,957) (16,761) 31,725 19,694 — 19,694 Foreign currency loss, net (17,025) (102) (7) — — (17,134) — (17,134) Loss on extinguishment of debt (857) (8,221) — (194) (1,466) (10,738) — (10,738) Other loss, net — (50) — — (73) (123) — (123) Total other income (loss) 20,086 (8,669) (46,502) 111,941 30,186 107,042 110,304 217,346 Income (loss) before income taxes 347,328 5,452 (35,926) 190,175 (140,019) 367,010 325 367,335 Income tax (provision) benefit (4,778) 746 (258) (4,090) — (8,380) — (8,380) Net income (loss) 342,550 6,198 (36,184) 186,085 (140,019) 358,630 325 358,955 Net income attributable to non-controlling interests (392) — (16,322) (4,121) — (20,835) (325) (21,160) Net income (loss) attributable to Starwood Property Trust, Inc . $ 342,158 $ 6,198 $ (52,506) $ 181,964 $ (140,019) $ 337,795 $ — $ 337,795 |
Schedule of condensed consolidated balance sheet by business segment | The table below presents our condensed consolidated balance sheet as of September 30, 2020 by business segment (amounts in thousands): Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 19,111 $ 994 $ 38,119 $ 22,054 $ 298,844 $ 379,122 $ 748 $ 379,870 Restricted cash 69,351 31,515 7,632 22,838 — 131,336 — 131,336 Loans held-for-investment, net 9,373,503 1,544,068 — 1,081 — 10,918,652 — 10,918,652 Loans held-for-sale 747,654 — — 265,019 — 1,012,673 — 1,012,673 Investment securities 1,152,362 39,813 — 1,097,322 — 2,289,497 (1,544,384) 745,113 Properties, net 27,123 — 1,983,124 197,575 — 2,207,822 — 2,207,822 Intangible assets — — 41,946 70,374 — 112,320 (38,181) 74,139 Investment in unconsolidated entities 50,850 24,664 — 45,236 — 120,750 (16,366) 104,384 Goodwill — 119,409 — 140,437 — 259,846 — 259,846 Derivative assets 25,805 — 54 1,250 37,716 64,825 — 64,825 Accrued interest receivable 72,344 3,244 — 334 3,484 79,406 (1,376) 78,030 Other assets 24,705 4,216 70,369 52,352 11,829 163,471 3 163,474 VIE assets, at fair value — — — — — — 64,477,475 64,477,475 Total Assets $ 11,562,808 $ 1,767,923 $ 2,141,244 $ 1,915,872 $ 351,873 $ 17,739,720 $ 62,877,919 $ 80,617,639 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 36,378 $ 8,545 $ 49,758 $ 35,796 $ 70,956 $ 201,433 $ 58 $ 201,491 Related-party payable — — — 5 22,091 22,096 — 22,096 Dividends payable — — — — 138,264 138,264 — 138,264 Derivative liabilities 8,839 1,516 — 3,097 — 13,452 — 13,452 Secured financing agreements, net 5,576,092 1,243,001 1,793,731 614,055 389,013 9,615,892 — 9,615,892 Collateralized loan obligations, net 929,931 — — — — 929,931 — 929,931 Unsecured senior notes, net — — — — 1,934,555 1,934,555 — 1,934,555 VIE liabilities, at fair value — — — — — — 62,876,265 62,876,265 Total Liabilities 6,551,240 1,253,062 1,843,489 652,953 2,554,879 12,855,623 62,876,323 75,731,946 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — 2,918 2,918 — 2,918 Additional paid-in capital 1,165,764 509,848 115,246 (124,805) 3,534,663 5,200,716 — 5,200,716 Treasury stock — — — — (133,024) (133,024) — (133,024) Accumulated other comprehensive income (loss) 42,350 — — (65) — 42,285 — 42,285 Retained earnings (accumulated deficit) 3,803,336 5,013 (42,898) 1,243,098 (5,607,563) (599,014) — (599,014) Total Starwood Property Trust, Inc. Stockholders’ Equity 5,011,450 514,861 72,348 1,118,228 (2,203,006) 4,513,881 — 4,513,881 Non-controlling interests in consolidated subsidiaries 118 — 225,407 144,691 — 370,216 1,596 371,812 Total Equity 5,011,568 514,861 297,755 1,262,919 (2,203,006) 4,884,097 1,596 4,885,693 Total Liabilities and Equity $ 11,562,808 $ 1,767,923 $ 2,141,244 $ 1,915,872 $ 351,873 $ 17,739,720 $ 62,877,919 $ 80,617,639 The table below presents our condensed consolidated balance sheet as of December 31, 2019 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 $ 26,278 $ 2,209 $ 30,123 $ 61,693 $ 356,864 $ 477,167 $ 1,221 $ 478,388 Restricted cash 36,135 41,967 7,171 10,370 — 95,643 — 95,643 Loans held-for-investment, net 9,187,332 1,397,448 — 1,294 — 10,586,074 — 10,586,074 Loans held-for-sale 605,384 119,528 — 159,238 — 884,150 — 884,150 Investment securities 992,974 45,153 — 1,177,148 — 2,215,275 (1,405,037) 810,238 Properties, net 26,834 — 2,029,024 210,582 — 2,266,440 — 2,266,440 Intangible assets — — 47,303 64,644 — 111,947 (26,247) 85,700 Investment in unconsolidated entities 46,921 25,862 — 32,183 — 104,966 (20,637) 84,329 Goodwill — 119,409 — 140,437 — 259,846 — 259,846 Derivative assets 14,718 7 3 7 14,208 28,943 — 28,943 Accrued interest receivable 45,996 3,134 133 2,388 13,242 64,893 (806) 64,087 Other assets 59,170 6,101 82,910 54,238 8,911 211,330 (7) 211,323 VIE assets, at fair value — — — — — — 62,187,175 62,187,175 Total Assets $ 11,041,742 $ 1,760,818 $ 2,196,667 $ 1,914,222 $ 393,225 $ 17,306,674 $ 60,735,662 $ 78,042,336 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 30,594 $ 6,443 $ 48,370 $ 73,021 $ 53,494 $ 211,922 $ 84 $ 212,006 Related-party payable — — — 5 40,920 40,925 — 40,925 Dividends payable — — — — 137,427 137,427 — 137,427 Derivative liabilities 7,698 750 — 292 — 8,740 — 8,740 Secured financing agreements, net 5,038,876 1,217,066 1,698,334 574,507 391,215 8,919,998 (13,950) 8,906,048 Collateralized loan obligations, net 928,060 — — — — 928,060 — 928,060 Unsecured senior notes, net — — — — 1,928,622 1,928,622 — 1,928,622 VIE liabilities, at fair value — — — — — — 60,743,494 60,743,494 Total Liabilities 6,005,228 1,224,259 1,746,704 647,825 2,551,678 12,175,694 60,729,628 72,905,322 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — 2,874 2,874 — 2,874 Additional paid-in capital 1,522,360 529,668 208,650 (123,210) 2,995,064 5,132,532 — 5,132,532 Treasury stock — — — — (104,194) (104,194) — (104,194) Accumulated other comprehensive income (loss) 50,996 — — (64) — 50,932 — 50,932 Retained earnings (accumulated deficit) 3,463,158 6,891 5,431 1,194,998 (5,052,197) (381,719) — (381,719) Total Starwood Property Trust, Inc. Stockholders’ Equity 5,036,514 536,559 214,081 1,071,724 (2,158,453) 4,700,425 — 4,700,425 Non-controlling interests in consolidated subsidiaries — — 235,882 194,673 — 430,555 6,034 436,589 Total Equity 5,036,514 536,559 449,963 1,266,397 (2,158,453) 5,130,980 6,034 5,137,014 Total Liabilities and Equity $ 11,041,742 $ 1,760,818 $ 2,196,667 $ 1,914,222 $ 393,225 $ 17,306,674 $ 60,735,662 $ 78,042,336 |
Business and Organization (Deta
Business and Organization (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
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 (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2020USD ($)country | Jan. 01, 2020USD ($) | |
Assets: | ||
REO assets as a percent of consolidated VIE assets | 1.00% | |
Loans as a percent of consolidated VIE assets | 99.00% | |
Fair Value Measurements | ||
Permitted reinvestment under static investment in VIEs | $ 0 | |
Minimum | ||
Credit Losses | ||
Number of countries and territories COVID-19 has spread to | country | 200 | |
ASU 2016-13 | Reclassification Adjustment | ||
Credit Losses | ||
Allowance for credit losses | $ 32.3 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Details) - Disposed of by sale - Investing and Servicing Segment - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Acquisitions and Divestitures | |||
Proceeds from sale of property | $ 51.5 | $ 24.1 | $ 51.5 |
Gain on sale of property | 20.7 | $ 7.4 | 20.7 |
Non-Controlling Interests | |||
Acquisitions and Divestitures | |||
Gain on sale of property | $ 4 | $ 4 |
Loans - Held for Investment (De
Loans - Held for Investment (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Investments in loans | ||||
Total gross loans | $ 12,041,072 | $ 11,503,835 | ||
Face Amount | 12,076,990 | 11,530,915 | ||
Total allowance | (109,747) | (33,611) | ||
Carrying Value | $ 11,931,325 | 11,470,224 | $ 10,361,772 | $ 9,794,254 |
Period covered in data base | 20 years | |||
Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 11,028,399 | 10,619,489 | ||
Face Amount | 11,068,514 | 10,661,865 | ||
Total allowance | (109,747) | (33,415) | ||
Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | 1,012,673 | 884,346 | ||
Face Amount | 1,008,476 | 869,050 | ||
Carrying Value | 1,012,673 | 884,150 | 74,346 | |
Commercial Portfolio Segment | ||||
Investments in loans | ||||
Total gross loans | 9,213,772 | |||
Commercial Portfolio Segment | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | 9,213,772 | 8,550,469 | ||
Face Amount | 9,241,161 | 8,590,776 | ||
Total allowance | (95,595) | (33,415) | ||
Carrying Value | 9,118,177 | 8,517,054 | 7,637,838 | 7,075,577 |
Commercial Portfolio Segment | 90 days or greater past due | ||||
Investments in loans | ||||
Total gross loans | 173,300 | |||
Commercial Portfolio Segment | Credit deteriorated | ||||
Investments in loans | ||||
Total gross loans | 142,330 | |||
Commercial Portfolio Segment | Credit deteriorated | 90 days or greater past due | ||||
Investments in loans | ||||
Total gross loans | 113,400 | |||
Infrastructure Portfolio Segment | ||||
Investments in loans | ||||
Total gross loans | 1,558,220 | |||
Infrastructure Portfolio Segment | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | 1,558,220 | 1,397,448 | ||
Face Amount | $ 1,578,030 | $ 1,416,164 | ||
Weighted Average Life | 4 years 3 months 18 days | 4 years 10 months 24 days | ||
Total allowance | $ (14,152) | |||
Carrying Value | 1,544,068 | $ 1,397,448 | 1,281,815 | 1,456,779 |
Reclassification to held for investment | $ 26,300 | |||
Infrastructure Portfolio Segment | Total loans held-for-investment | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 4.20% | 5.60% | ||
Infrastructure Portfolio Segment | Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | $ 119,724 | |||
Face Amount | $ 121,271 | |||
Weighted Average Life | 2 years 1 month 6 days | |||
Total allowance | $ (196) | |||
Reclassification to held-for-sale | $ 104,300 | |||
Infrastructure Portfolio Segment | Loans held-for-sale | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 3.30% | |||
Residential Portfolio Segment | ||||
Investments in loans | ||||
Total gross loans | 256,407 | |||
Residential Portfolio Segment | Total loans held-for-investment | ||||
Investments in loans | ||||
Carrying Value | 256,407 | $ 671,572 | $ 1,442,119 | $ 1,187,552 |
Residential Portfolio Segment | Loans held-for-sale | ||||
Investments in loans | ||||
Reclassification to held-for-sale | 422,700 | |||
Residential Portfolio Segment | 90 days or greater past due | ||||
Investments in loans | ||||
Total gross loans | 13,400 | |||
RMBS, fair value option | Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | 605,384 | |||
Face Amount | $ 587,144 | |||
Weighted Average Life | 3 years 10 months 24 days | |||
RMBS, fair value option | Loans held-for-sale | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 6.20% | |||
RMBS, fair value option | Residential Portfolio Segment | Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | 747,654 | |||
Face Amount | $ 742,106 | |||
Weighted Average Life | 3 years 4 months 24 days | |||
RMBS, fair value option | Residential Portfolio Segment | Loans held-for-sale | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 6.00% | |||
CMBS, fair value option | Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | $ 159,238 | |||
Face Amount | $ 160,635 | |||
Weighted Average Life | 10 years | |||
CMBS, fair value option | Loans held-for-sale | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 3.90% | |||
CMBS, fair value option | Commercial Portfolio Segment | Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | $ 265,019 | |||
Face Amount | $ 266,370 | |||
Weighted Average Life | 10 years | |||
CMBS, fair value option | Commercial Portfolio Segment | Loans held-for-sale | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 4.10% | |||
First mortgage loan participation | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 8,525,273 | |||
Face Amount | $ 8,548,916 | |||
Weighted Average Life | 1 year 7 months 6 days | |||
First mortgage loan participation | Total loans held-for-investment | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 5.30% | |||
First mortgage loan participation | Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | $ 7,928,026 | |||
Face Amount | $ 7,962,788 | |||
Weighted Average Life | 2 years | |||
First mortgage loan participation | Loans held-for-sale | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 5.80% | |||
Subordinated mortgages | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 69,835 | $ 75,724 | ||
Face Amount | $ 70,979 | $ 77,055 | ||
Weighted Average Life | 3 years | 3 years 4 months 24 days | ||
Subordinated mortgages | Total loans held-for-investment | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 8.80% | 8.80% | ||
Mezzanine Loans | ||||
Investments in loans | ||||
Carrying Value | $ 896,800 | $ 967,000,000 | ||
Mezzanine Loans | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | 588,116 | 484,164 | ||
Face Amount | $ 587,223 | $ 484,408 | ||
Weighted Average Life | 1 year 7 months 6 days | 1 year 10 months 24 days | ||
Mezzanine Loans | Total loans held-for-investment | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 10.30% | 11.00% | ||
Residential loans, fair value option | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 256,407 | $ 671,572 | ||
Face Amount | $ 249,323 | $ 654,925 | ||
Weighted Average Life | 3 years 4 months 24 days | 3 years 9 months 18 days | ||
Residential loans, fair value option | Total loans held-for-investment | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 6.20% | 6.10% | ||
Other | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 30,548 | $ 62,555 | ||
Face Amount | $ 34,043 | $ 66,525 | ||
Weighted Average Life | 2 years | 1 year 7 months 6 days | ||
Other | Total loans held-for-investment | Weighted-average | ||||
Investments in loans | ||||
Weighted Average Coupon (as a percent) | 8.90% | 8.20% |
Loans - Variable Rate Loans Hel
Loans - Variable Rate Loans Held for Investment (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2020USD ($) | |
Variable rate loans held-for-investment | |
Total variable rate loans held-for-investment, carrying value | $ 10,126,332 |
Weighted average spread of loans (as a percent) | 4.10% |
Credit Loss Allowances | |
Macroeconomic recovery expected growth period | 5 years |
Commercial loans | |
Variable rate loans held-for-investment | |
Total variable rate loans held-for-investment, carrying value | $ 8,568,112 |
Weighted average spread of loans (as a percent) | 4.20% |
Infrastructure loans | |
Variable rate loans held-for-investment | |
Total variable rate loans held-for-investment, carrying value | $ 1,558,220 |
Weighted average spread of loans (as a percent) | 3.80% |
Loans - Ratings (Details)
Loans - Ratings (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Investments in loans | ||
Loans Amortized Cost Basis | $ 12,041,072 | $ 11,503,835 |
Credit Loss Allowance | 109,747 | |
Total loans held-for-investment | ||
Investments in loans | ||
Loans Amortized Cost Basis | 11,028,399 | 10,619,489 |
Total loans held-for-investment | First mortgage loan participation | ||
Investments in loans | ||
Loans Amortized Cost Basis | 8,525,273 | |
Total loans held-for-investment | Subordinated mortgages | ||
Investments in loans | ||
Loans Amortized Cost Basis | 69,835 | 75,724 |
Total loans held-for-investment | Mezzanine Loans | ||
Investments in loans | ||
Loans Amortized Cost Basis | 588,116 | 484,164 |
Total loans held-for-investment | Residential loans, fair value option | ||
Investments in loans | ||
Loans Amortized Cost Basis | 256,407 | 671,572 |
Total loans held-for-investment | Other | ||
Investments in loans | ||
Loans Amortized Cost Basis | 30,548 | 62,555 |
Loans held-for-sale | ||
Investments in loans | ||
Loans Amortized Cost Basis | 1,012,673 | 884,346 |
Loans held-for-sale | First mortgage loan participation | ||
Investments in loans | ||
Loans Amortized Cost Basis | 7,928,026 | |
Commercial Portfolio Segment | ||
Investments in loans | ||
2020 | 1,140,335 | |
2019 | 3,135,969 | |
2018 | 2,902,758 | |
2017 | 1,216,472 | |
2016 | 207,648 | |
Prior | 610,590 | |
Loans Amortized Cost Basis | 9,213,772 | |
Credit Loss Allowance | 95,595 | |
Commercial Portfolio Segment | 90 days or greater past due | ||
Investments in loans | ||
Loans Amortized Cost Basis | 173,300 | |
Commercial Portfolio Segment | LTV Less than 60% | ||
Investments in loans | ||
2020 | 618,232 | |
2019 | 1,084,103 | |
2018 | 977,021 | |
2017 | 1,031,872 | |
2016 | 154,198 | |
Prior | 215,747 | |
Loans Amortized Cost Basis | 4,081,173 | |
Credit Loss Allowance | 11,751 | |
Commercial Portfolio Segment | LTV 60% - 70% | ||
Investments in loans | ||
2020 | 138,058 | |
2019 | 1,469,532 | |
2018 | 1,653,299 | |
2017 | 35,931 | |
2016 | 53,450 | |
Prior | 191,211 | |
Loans Amortized Cost Basis | 3,541,481 | |
Credit Loss Allowance | 35,691 | |
Commercial Portfolio Segment | LTV > 70% | ||
Investments in loans | ||
2020 | 384,045 | |
2019 | 582,334 | |
2018 | 243,452 | |
2017 | 140,914 | |
Prior | 75,250 | |
Loans Amortized Cost Basis | 1,425,995 | |
Credit Loss Allowance | 18,300 | |
Commercial Portfolio Segment | Credit deteriorated | ||
Investments in loans | ||
2018 | 28,986 | |
2017 | 7,755 | |
Prior | 105,589 | |
Loans Amortized Cost Basis | 142,330 | |
Credit Loss Allowance | 29,853 | |
Commercial Portfolio Segment | Credit deteriorated | 90 days or greater past due | ||
Investments in loans | ||
Loans Amortized Cost Basis | 113,400 | |
Commercial Portfolio Segment | Defeased and other | ||
Investments in loans | ||
Prior | 22,793 | |
Loans Amortized Cost Basis | 22,793 | |
Commercial Portfolio Segment | Total loans held-for-investment | ||
Investments in loans | ||
Loans Amortized Cost Basis | 9,213,772 | 8,550,469 |
Infrastructure Portfolio Segment | ||
Investments in loans | ||
2019 | 480,794 | |
2018 | 403,731 | |
2017 | 148,159 | |
2016 | 188,331 | |
Prior | 312,176 | |
Revolving Loans Amortized Cost Total | 25,029 | |
Loans Amortized Cost Basis | 1,558,220 | |
Credit Loss Allowance | 14,152 | |
Infrastructure Portfolio Segment | Power | ||
Investments in loans | ||
2019 | 246,675 | |
2018 | 300,909 | |
2017 | 148,159 | |
2016 | 188,331 | |
Prior | 312,176 | |
Revolving Loans Amortized Cost Total | 23,413 | |
Loans Amortized Cost Basis | 1,219,663 | |
Credit Loss Allowance | 7,692 | |
Infrastructure Portfolio Segment | Oil and gas | ||
Investments in loans | ||
2019 | 234,119 | |
2018 | 102,822 | |
Revolving Loans Amortized Cost Total | 1,616 | |
Loans Amortized Cost Basis | 338,557 | |
Credit Loss Allowance | 6,460 | |
Infrastructure Portfolio Segment | Total loans held-for-investment | ||
Investments in loans | ||
Loans Amortized Cost Basis | 1,558,220 | 1,397,448 |
Infrastructure Portfolio Segment | Loans held-for-sale | ||
Investments in loans | ||
Loans Amortized Cost Basis | $ 119,724 | |
Residential Portfolio Segment | ||
Investments in loans | ||
Loans Amortized Cost Basis | 256,407 | |
Residential Portfolio Segment | 90 days or greater past due | ||
Investments in loans | ||
Loans Amortized Cost Basis | $ 13,400 |
Loans - Activity in Portfolio (
Loans - Activity in Portfolio (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | $ 33,611 | |||
Credit loss allowance at the end of the period | $ 109,747 | 109,747 | ||
Activity in loan portfolio | ||||
Balance at the beginning of the period | 11,470,224 | $ 9,794,254 | ||
Acquisitions/origination/additional funding | 4,168,949 | 5,607,829 | ||
Capitalized Interest | 105,377 | 79,869 | ||
Basis of loans sold | (2,433,412) | (2,713,237) | ||
Loan maturities/principal repayments | (1,396,124) | (2,429,078) | ||
Discount accretion/premium amortization | 30,468 | 24,193 | ||
Changes in fair value | 61,384 | $ 32,521 | 79,700 | 65,678 |
Unrealized foreign currency translation (loss) gain | (16,608) | (37,191) | ||
Credit loss provision, net | (56,809) | (3,242) | ||
Loan foreclosure | (27,303) | |||
Balance at the end of the period | 11,931,325 | 10,361,772 | 11,931,325 | 10,361,772 |
ASU 2016-13 | ||||
Activity in loan portfolio | ||||
Loan maturities/principal repayments | (20,440) | |||
Total loans held-for-investment | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | 33,415 | |||
Credit loss allowance at the end of the period | 109,747 | 109,747 | ||
Loans held-for-sale | ||||
Activity in loan portfolio | ||||
Balance at the beginning of the period | 884,150 | 74,346 | ||
Acquisitions/origination/additional funding | 1,800,018 | |||
Basis of loans sold | (2,035,770) | |||
Loan maturities/principal repayments | (75,632) | (74,692) | ||
Discount accretion/premium amortization | 110 | 346 | ||
Changes in fair value | 96,265 | |||
Unrealized foreign currency translation (loss) gain | (1,291) | |||
Credit loss provision, net | 125 | |||
Transfer to/from other asset classifications | 344,698 | |||
Balance at the end of the period | 1,012,673 | 1,012,673 | ||
Funded committments | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | 33,611 | |||
Credit loss provision (reversal), net | 56,809 | |||
Charge-offs | (1,113) | |||
Credit loss allowance at the end of the period | 109,747 | 109,747 | ||
Funded committments | ASU 2016-13 | ||||
Activity in allowance for loan losses | ||||
Provision for impaired loans | 20,440 | |||
Unfunded commitments | ASU 2016-13 | ||||
Activity in allowance for loan losses | ||||
Provision for impaired loans | 10,553 | |||
Credit loss provision (reversal), net | (3,820) | |||
Credit loss allowance at the end of the period | 6,733 | 6,733 | ||
Unfunded commitments | (1,726,244) | (1,726,244) | ||
Commercial Portfolio Segment | Total loans held-for-investment | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | 33,415 | |||
Credit loss allowance at the end of the period | 95,595 | 95,595 | ||
Activity in loan portfolio | ||||
Balance at the beginning of the period | 8,517,054 | 7,075,577 | ||
Acquisitions/origination/additional funding | 2,090,964 | 2,489,120 | ||
Capitalized Interest | 105,329 | 79,869 | ||
Basis of loans sold | (397,038) | (548,329) | ||
Loan maturities/principal repayments | (1,148,317) | (1,695,388) | ||
Discount accretion/premium amortization | 28,686 | 22,674 | ||
Changes in fair value | 1,496 | |||
Unrealized foreign currency translation (loss) gain | (15,279) | (37,473) | ||
Credit loss provision, net | (53,110) | (2,046) | ||
Loan foreclosure | (27,303) | |||
Transfer to/from other asset classifications | 279,641 | |||
Balance at the end of the period | 9,118,177 | 7,637,838 | 9,118,177 | 7,637,838 |
Commercial Portfolio Segment | Total loans held-for-investment | ASU 2016-13 | ||||
Activity in loan portfolio | ||||
Loan maturities/principal repayments | (10,112) | |||
Commercial Portfolio Segment | Funded committments | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | 33,415 | |||
Credit loss provision (reversal), net | 53,110 | |||
Charge-offs | (1,042) | |||
Credit loss allowance at the end of the period | 95,595 | 95,595 | ||
Commercial Portfolio Segment | Funded committments | ASU 2016-13 | ||||
Activity in allowance for loan losses | ||||
Provision for impaired loans | 10,112 | |||
Commercial Portfolio Segment | Unfunded commitments | ASU 2016-13 | ||||
Activity in allowance for loan losses | ||||
Provision for impaired loans | 8,348 | |||
Credit loss provision (reversal), net | (3,156) | |||
Credit loss allowance at the end of the period | 5,192 | 5,192 | ||
Unfunded commitments | (1,630,823) | (1,630,823) | ||
Infrastructure Portfolio Segment | Total loans held-for-investment | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the end of the period | 14,152 | 14,152 | ||
Activity in loan portfolio | ||||
Balance at the beginning of the period | 1,397,448 | 1,456,779 | ||
Acquisitions/origination/additional funding | 177,247 | 387,599 | ||
Capitalized Interest | 48 | |||
Loan maturities/principal repayments | (96,150) | (563,736) | ||
Discount accretion/premium amortization | 1,672 | 1,173 | ||
Unrealized foreign currency translation (loss) gain | (38) | |||
Credit loss provision, net | (3,824) | |||
Transfer to/from other asset classifications | 77,993 | |||
Balance at the end of the period | 1,544,068 | 1,281,815 | 1,544,068 | 1,281,815 |
Infrastructure Portfolio Segment | Total loans held-for-investment | ASU 2016-13 | ||||
Activity in loan portfolio | ||||
Loan maturities/principal repayments | (10,328) | |||
Infrastructure Portfolio Segment | Loans held-for-sale | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | 196 | |||
Infrastructure Portfolio Segment | Funded committments | ||||
Activity in allowance for loan losses | ||||
Credit loss provision (reversal), net | 3,824 | |||
Credit loss allowance at the end of the period | 14,152 | 14,152 | ||
Infrastructure Portfolio Segment | Funded committments | ASU 2016-13 | ||||
Activity in allowance for loan losses | ||||
Provision for impaired loans | 10,328 | |||
Infrastructure Portfolio Segment | Unfunded commitments | ASU 2016-13 | ||||
Activity in allowance for loan losses | ||||
Provision for impaired loans | 2,205 | |||
Credit loss provision (reversal), net | (664) | |||
Credit loss allowance at the end of the period | 1,541 | 1,541 | ||
Unfunded commitments | (95,421) | (95,421) | ||
Loans Held For Sale Infrastructure | Funded committments | ||||
Activity in allowance for loan losses | ||||
Credit loss allowance at the beginning of the period | 196 | |||
Credit loss provision (reversal), net | (125) | |||
Charge-offs | (71) | |||
Residential Portfolio Segment | Total loans held-for-investment | ||||
Activity in loan portfolio | ||||
Balance at the beginning of the period | 671,572 | 1,187,552 | ||
Acquisitions/origination/additional funding | 100,720 | 2,731,110 | ||
Basis of loans sold | (604) | (2,164,908) | ||
Loan maturities/principal repayments | (76,025) | (95,262) | ||
Changes in fair value | (16,565) | 64,182 | ||
Unrealized foreign currency translation (loss) gain | 282 | |||
Credit loss provision, net | (1,196) | |||
Transfer to/from other asset classifications | (422,691) | (279,641) | ||
Balance at the end of the period | $ 256,407 | $ 1,442,119 | $ 256,407 | $ 1,442,119 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Investment Securities | |||||
Investment securities | $ 745,113 | $ 745,113 | $ 810,238 | ||
Credit Loss Allowance | 6,425 | 6,425 | |||
Purchases | 6,288 | $ 5,165 | 22,408 | $ 5,165 | |
Sales | 7,940 | 3,978 | |||
Principal collections | 17,478 | 45,857 | 67,957 | 118,892 | |
VIE eliminations | |||||
Investment Securities | |||||
Purchases | (43,083) | (57,894) | (265,469) | (136,379) | |
Sales | (49,725) | (24,376) | (149,949) | ||
Principal collections | (20,185) | (17,196) | (57,174) | (38,607) | |
Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | $ 2,289,497 | $ 2,289,497 | $ 2,215,275 | ||
Available-for-sale | One-month LIBOR | |||||
Investment Securities | |||||
Effective variable rate basis (as a percent) | 0.1483% | 0.1483% | 1.763% | ||
Fair value option | |||||
Investment Securities | |||||
Fair Value | $ 1,600 | $ 1,600 | |||
Fair value option | VIE eliminations | |||||
Investment Securities | |||||
Investment securities | (1,544,384) | (1,544,384) | $ (1,405,037) | ||
Held-to-maturity | |||||
Investment Securities | |||||
Credit Loss Allowance | 6,425 | 6,425 | 0 | ||
Purchases | 6,288 | 22,408 | |||
Principal collections | 11,203 | 35,069 | 48,554 | 89,737 | |
Held-to-maturity | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 541,296 | 541,296 | 570,638 | ||
RMBS | |||||
Investment Securities | |||||
Portion of securities with variable rate | 144,500 | 144,500 | |||
RMBS | Available-for-sale | |||||
Investment Securities | |||||
Principal collections | 6,063 | 7,445 | 18,626 | 20,222 | |
Purchase Amortized Cost | 127,921 | 127,921 | 138,580 | ||
Recorded Amortized Cost | 127,921 | 127,921 | 138,580 | ||
Gross Unrealized Gains | 42,523 | 42,523 | 51,310 | ||
Gross Unrealized Losses | (174) | (174) | (314) | ||
Net Fair Value Adjustment | 42,349 | 42,349 | 50,996 | ||
Fair Value | $ 170,270 | $ 170,270 | 189,576 | ||
Portion of securities with variable rate | $ 160,900 | ||||
Portion of securities with variable rate (as a percent) | 84.90% | 84.90% | 84.90% | ||
Cost of third party management | $ 300 | $ 1,000 | 1,100 | ||
RMBS | Available-for-sale | LIBOR | |||||
Investment Securities | |||||
Variable rate, weighted average spread (as a percent) | 1.26% | 1.24% | |||
RMBS | Available-for-sale | B- | |||||
Investment Securities | |||||
Weighted Average Coupon (as a percent) | 1.50% | 1.50% | 3.10% | ||
WAL (Years) | 5 years 8 months 12 days | 5 years 7 months 6 days | |||
RMBS | Available-for-sale | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | $ 170,270 | $ 170,270 | $ 189,576 | ||
RMBS | Fair value option | |||||
Investment Securities | |||||
Purchases | 43,083 | 52,845 | 257,808 | 79,117 | |
Sales | 41,501 | ||||
Principal collections | 12,132 | 4,680 | 32,236 | 9,772 | |
Portion of securities with variable rate | 0 | 0 | |||
RMBS | Fair value option | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 373,682 | 373,682 | 147,034 | ||
CMBS | Fair value option | |||||
Investment Securities | |||||
Purchases | 10,214 | 7,661 | 62,427 | ||
Sales | 49,725 | 32,316 | 112,426 | ||
Principal collections | 8,265 | $ 15,859 | 25,715 | $ 37,768 | |
Portion of securities with variable rate | 96,900 | 96,900 | |||
CMBS | Fair value option | Non-Controlling Interests | |||||
Investment Securities | |||||
Investment securities | 178,600 | 178,600 | 186,600 | ||
CMBS | Fair value option | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 1,194,191 | 1,194,191 | 1,295,363 | ||
Equity security | Fair value option | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 10,058 | 10,058 | $ 12,664 | ||
Infrastructure bonds | |||||
Investment Securities | |||||
Credit Loss Allowance | $ 2,972 | $ 2,972 |
Investment Securities - AFS and
Investment Securities - AFS and Fair Value Option (Details) $ in Thousands | Sep. 30, 2020USD ($)security | Dec. 31, 2019USD ($)security |
Unrealized Losses | ||
Number of securities with unrealized losses | security | 2 | 1 |
RMBS | ||
Estimated Fair Value | ||
Securities with a loss less than 12 months | $ 412 | |
Securities with a loss greater than 12 months | 1,194 | $ 1,380 |
Unrealized Losses | ||
Securities with a loss less than 12 months | (45) | |
Securities with a loss greater than 12 months | (129) | (314) |
Portion of securities with variable rate | 144,500 | |
RMBS | Available-for-sale | ||
Unrealized Losses | ||
Portion of securities with variable rate | $ 160,900 | |
RMBS | Fair value option | ||
Unrealized Losses | ||
Fair value of investment securities before consolidation of VIEs | 373,700 | |
Unpaid principal balance of investment securities before consolidation of VIEs | 275,800 | |
Portion of securities with variable rate | 0 | |
CMBS | Fair value option | ||
Unrealized Losses | ||
Fair value of investment securities before consolidation of VIEs | 1,200,000 | |
Unpaid principal balance of investment securities before consolidation of VIEs | 2,700,000 | |
Portion of securities with variable rate | 96,900 | |
VIE eliminations | ||
Unrealized Losses | ||
Fair value of investment securities before consolidation of VIEs eliminated against VIE liabilities | $ 23,500 |
Investment Securities - HTM (De
Investment Securities - HTM (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | |
HTM Securities | ||||
Amortized Cost Basis | $ 547,721 | $ 570,638 | ||
Credit Loss Allowance | $ (6,425) | (6,425) | ||
Net Carrying Amount | 541,296 | 570,638 | ||
Gross Unrealized Holdings Gains | 352 | 2,094 | ||
Gross Unrealized Holdings Losses | (28,840) | (4,005) | ||
Fair Value | 512,808 | 568,727 | ||
Activity in credit loss allowance for HTM debt securities | ||||
Credit loss provision, net | 2,295 | |||
Credit loss allowance at ending | 6,425 | |||
HTM preferred equity interests | ||||
Less than one year | 270,716 | |||
One to three years | 211,900 | |||
Three to five years | 21,499 | |||
Thereafter | 37,181 | |||
Total | 541,296 | 570,638 | ||
CMBS | ||||
HTM Securities | ||||
Amortized Cost Basis | 338,984 | 383,473 | ||
Net Carrying Amount | 338,984 | 383,473 | ||
Gross Unrealized Holdings Gains | 946 | |||
Gross Unrealized Holdings Losses | (23,277) | (3,001) | ||
Fair Value | 315,707 | 381,418 | ||
HTM preferred equity interests | ||||
Less than one year | 268,084 | |||
One to three years | 70,900 | |||
Total | 338,984 | 383,473 | ||
Preferred interests | ||||
HTM Securities | ||||
Amortized Cost Basis | 165,952 | 142,012 | ||
Credit Loss Allowance | (3,453) | (3,453) | ||
Net Carrying Amount | 162,499 | 142,012 | ||
Gross Unrealized Holdings Gains | 1,148 | |||
Gross Unrealized Holdings Losses | (5,550) | (353) | ||
Fair Value | 156,949 | 142,807 | ||
Activity in credit loss allowance for HTM debt securities | ||||
Credit loss provision, net | 2,339 | |||
Credit loss allowance at ending | 3,453 | |||
HTM preferred equity interests | ||||
One to three years | 141,000 | |||
Three to five years | 21,499 | |||
Total | 162,499 | 142,012 | ||
Infrastructure bonds | ||||
HTM Securities | ||||
Amortized Cost Basis | 42,785 | 45,153 | ||
Credit Loss Allowance | (2,972) | (2,972) | ||
Net Carrying Amount | 39,813 | 45,153 | ||
Gross Unrealized Holdings Gains | 352 | |||
Gross Unrealized Holdings Losses | (13) | (651) | ||
Fair Value | 40,152 | 44,502 | ||
Activity in credit loss allowance for HTM debt securities | ||||
Credit loss provision, net | (44) | |||
Credit loss allowance at ending | $ 2,972 | |||
HTM preferred equity interests | ||||
Less than one year | 2,632 | |||
Thereafter | 37,181 | |||
Total | $ 39,813 | $ 45,153 | ||
ASU 2016-13 | ||||
Activity in credit loss allowance for HTM debt securities | ||||
Accumulated deficit charge | $ 1,293 | |||
Gross-up of PCD bond amortized cost basis | 2,837 | |||
ASU 2016-13 | Preferred interests | ||||
Activity in credit loss allowance for HTM debt securities | ||||
Accumulated deficit charge | 1,114 | |||
ASU 2016-13 | Infrastructure bonds | ||||
Activity in credit loss allowance for HTM debt securities | ||||
Accumulated deficit charge | 179 | |||
Gross-up of PCD bond amortized cost basis | $ 2,837 |
Investment Securities - SEREF (
Investment Securities - SEREF (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2012 | Dec. 31, 2019 | |
Residential Real Estate | |||
Fair value of the investment | $ 45,862 | $ 26,746 | |
SEREF | |||
Residential Real Estate | |||
Number of shares acquired | 9,140,000 | ||
Fair value of the investment | $ 10,100 | $ 12,700 | |
Ownership percentage | 2.00% |
Properties (Details)
Properties (Details) $ in Thousands, ft² in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 24 Months Ended | ||||||
Dec. 31, 2017item | Sep. 30, 2017ft²property | Sep. 30, 2019USD ($)item | Sep. 30, 2020USD ($)itemproperty | Sep. 30, 2019USD ($)item | Dec. 31, 2018item | Dec. 31, 2016ft²item | Dec. 31, 2015item | Dec. 31, 2018item | Dec. 31, 2016ft²item | Dec. 31, 2019USD ($) | |
Summary of properties | |||||||||||
Properties, cost | $ 2,489,438 | $ 2,490,630 | |||||||||
Less: accumulated depreciation | (281,616) | (224,190) | |||||||||
Properties, net | 2,207,822 | 2,266,440 | |||||||||
Property Segment | |||||||||||
Summary of properties | |||||||||||
Land and land improvements | 484,722 | 484,397 | |||||||||
Buildings and building improvements | 1,689,004 | 1,687,756 | |||||||||
Furniture & fixtures | $ 57,894 | 52,567 | |||||||||
Property Segment | Minimum | |||||||||||
Summary of properties | |||||||||||
Land and 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 and land improvements, useful life | 15 years | ||||||||||
Building and building improvements, useful life | 45 years | ||||||||||
Furniture & fixtures, useful life | 7 years | ||||||||||
Investing and Servicing Segment | |||||||||||
Summary of properties | |||||||||||
Land and land improvements | $ 50,789 | 54,052 | |||||||||
Buildings and building improvements | 175,676 | 182,048 | |||||||||
Furniture & fixtures | $ 2,513 | 2,139 | |||||||||
Investing and Servicing Segment | Minimum | |||||||||||
Summary of properties | |||||||||||
Land and land improvements, useful life | 0 years | ||||||||||
Building and building improvements, useful life | 3 years | ||||||||||
Furniture & fixtures, useful life | 2 years | ||||||||||
Investing and Servicing Segment | Maximum | |||||||||||
Summary of properties | |||||||||||
Land and land improvements, useful life | 15 years | ||||||||||
Building and building improvements, useful life | 40 years | ||||||||||
Furniture & fixtures, useful life | 5 years | ||||||||||
Investing and Servicing Segment | Disposed of by sale | |||||||||||
Properties | |||||||||||
Gain on sale of property | $ 20,700 | $ 7,400 | $ 20,700 | ||||||||
Investing and Servicing Segment | Disposed of by sale | Non-Controlling Interests | |||||||||||
Properties | |||||||||||
Gain on sale of property | $ 4,000 | $ 4,000 | |||||||||
Commercial and Residential Lending Segment | |||||||||||
Summary of properties | |||||||||||
Land and land improvements | 11,416 | 11,386 | |||||||||
Buildings | $ 17,424 | $ 16,285 | |||||||||
Commercial and Residential Lending Segment | Minimum | |||||||||||
Summary of properties | |||||||||||
Land and land improvements, useful life | 0 years | ||||||||||
Building and building improvements, useful life | 10 years | ||||||||||
Commercial and Residential Lending Segment | Maximum | |||||||||||
Summary of properties | |||||||||||
Land and land improvements, useful life | 10 years | ||||||||||
Building and building improvements, useful life | 23 years | ||||||||||
Woodstar Portfolio | |||||||||||
Properties | |||||||||||
Number of properties in portfolio investment | item | 32 | 32 | |||||||||
Total gross properties and lease intangibles | $ 634,000 | ||||||||||
Debt | $ 572,200 | ||||||||||
Number of units acquired | item | 8,948 | ||||||||||
Number of acquired properties closed | item | 14 | 18 | |||||||||
Woodstar II Portfolio | |||||||||||
Properties | |||||||||||
Number of properties in portfolio investment | item | 27 | ||||||||||
Total gross properties and lease intangibles | $ 607,700 | ||||||||||
Debt | $ 437,000 | ||||||||||
Number of units in portfolio investment | item | 6,109 | ||||||||||
Number of acquired properties closed | item | 8 | 19 | 27 | ||||||||
Medical Office Portfolio | |||||||||||
Properties | |||||||||||
Area of property | ft² | 1.9 | 1.9 | |||||||||
Total gross properties and lease intangibles | $ 760,100 | ||||||||||
Debt | 591,900 | ||||||||||
Number of acquired properties closed | item | 34 | ||||||||||
Master Lease Portfolio | |||||||||||
Properties | |||||||||||
Total gross properties and lease intangibles | 343,800 | ||||||||||
Debt | 192,600 | ||||||||||
Number of retail properties acquired | property | 16 | ||||||||||
Number of square feet of properties | ft² | 1.9 | ||||||||||
Term of master lease agreements | 24 years 7 months 6 days | ||||||||||
REIS Equity Portfolio | |||||||||||
Properties | |||||||||||
Total gross properties and lease intangibles | 266,500 | ||||||||||
Debt | $ 169,200 | ||||||||||
Number of retail properties acquired | property | 15 | ||||||||||
Number of equity interests in unconsolidated commercial real estate properties | property | 1 | ||||||||||
Number of properties sold | item | 1 | 1 | 1 | ||||||||
Proceeds from sale of operating properties | $ 51,500 | $ 24,100 | $ 51,500 | ||||||||
Gain on sale of property | 20,700 | $ 7,400 | 20,700 | ||||||||
REIS Equity Portfolio | Non-Controlling Interests | |||||||||||
Properties | |||||||||||
Gain on sale of property | $ 4,000 | $ 4,000 | |||||||||
Utah, Florida, Texas and Minnesota | Master Lease Portfolio | Minimum | |||||||||||
Properties | |||||||||||
Concentration risk (as a percent) | 50.00% |
Investment in Unconsolidated _3
Investment in Unconsolidated Entities (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Apr. 30, 2020USD ($) | Sep. 30, 2020USD ($)item | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Investment in Unconsolidated Entities | ||||
Equity method, Carrying value | $ 58,522 | $ 57,583 | ||
Gain on sale of equity method investments | $ 10,300 | $ 17,600 | ||
Number of publicly traded investments | item | 0 | |||
Fair value of the investment | $ 45,862 | 26,746 | ||
Investment in unconsolidated entities | 104,384 | 84,329 | ||
Capital distribution | 2,485 | $ 12,455 | ||
Cash proceeds | $ 10,300 | |||
Equity method investment, ownership percentage sold | 37.00% | |||
Carrying value over (under) equity in net assets | $ 0 | |||
Retail Fund | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Participation / Ownership % | 33.00% | |||
Number of regional shopping malls | item | 4 | |||
Investor entity which owns equity in two real estate services providers | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Participation / Ownership % | 50.00% | |||
Equity method, Carrying value | $ 9,382 | 9,473 | ||
Equity interest in a natural gas power plant | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Participation / Ownership % | 10.00% | |||
Equity method, Carrying value | $ 24,664 | 25,862 | ||
Equity interests in commercial real estate | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Participation / Ownership % | 50.00% | |||
Equity method, Carrying value | $ 1,742 | 1,907 | ||
Equity interest in a residential mortgage originator | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Carrying value | 14,139 | 12,002 | ||
Carrying value over (under) equity in net assets | 1,600 | |||
Equity interest in a residential mortgage originator | Subordinated Loans | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Carrying value | 4,500 | 4,500 | ||
Various - Equity method | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Carrying value | $ 8,595 | $ 8,339 | ||
Various - Equity method | Minimum | ||||
Investment in Unconsolidated Entities | ||||
Equity method, Participation / Ownership % | 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 % | 2.00% | 2.00% | 4.00% | |
Equity method, Carrying value | $ 0 | |||
Fair value of the investment | $ 17,584 | |||
Capital distribution | 8,400 | |||
Investment funds which own equity in a loan servicer and other real estate assets | ||||
Investment in Unconsolidated Entities | ||||
Fair value of the investment | $ 7,659 | $ 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% | ||
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% | ||
Various | ||||
Investment in Unconsolidated Entities | ||||
Fair value of the investment | $ 20,619 | $ 17,521 | ||
Various | Minimum | ||||
Investment in Unconsolidated Entities | ||||
Cost method, Ownership % | 0.00% | 0.00% | ||
Various | Maximum | ||||
Investment in Unconsolidated Entities | ||||
Cost method, Ownership % | 2.00% | 2.00% |
Goodwill and Intangibles (Detai
Goodwill and Intangibles (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Intangible Assets | ||
Goodwill | $ 259,846 | $ 259,846 |
Summary of Intangible Assets | ||
Gross Carrying Value | 172,021 | 176,428 |
Accumulated Amortization | (97,882) | (90,728) |
Net Carrying Value | 74,139 | 85,700 |
In-place lease | ||
Summary of Intangible Assets | ||
Gross Carrying Value | 133,244 | 135,293 |
Accumulated Amortization | (90,318) | (84,383) |
Net Carrying Value | 42,926 | 50,910 |
Favorable lease | ||
Summary of Intangible Assets | ||
Gross Carrying Value | 24,188 | 24,218 |
Accumulated Amortization | (7,564) | (6,345) |
Net Carrying Value | 16,624 | 17,873 |
Domestic Servicing Rights | ||
Summary of Intangible Assets | ||
Gross Carrying Value | 14,589 | 16,917 |
Net Carrying Value | 14,589 | 16,917 |
Domestic Servicing Rights | Before consolidation of securitization VIEs | ||
Intangible Assets | ||
Servicing rights intangibles | 52,800 | 43,200 |
Domestic Servicing Rights | VIE eliminations | ||
Intangible Assets | ||
Servicing rights intangibles | 38,200 | 26,200 |
Infrastructure Lending Segment | ||
Intangible Assets | ||
Goodwill | 119,400 | 119,400 |
Investing and Servicing Segment | ||
Intangible Assets | ||
Goodwill | $ 140,400 | $ 140,400 |
Goodwill and Intangibles - Acti
Goodwill and Intangibles - Activity (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Summary of activity within intangible assets | |
Balance as of beginning of period | $ 85,700 |
Amortization | (9,063) |
Sales | (170) |
Changes in fair value due to changes in inputs and assumptions | (2,328) |
Balance as of end of period | 74,139 |
Future rental payments due to us from tenants under existing non-cancellable operating leases | |
2020 (remainder of) | 2,636 |
2021 | 9,644 |
2022 | 7,862 |
2023 | 6,115 |
2024 | 4,722 |
Thereafter | 28,571 |
Total | 59,550 |
In-place lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 50,910 |
Amortization | (7,814) |
Sales | (170) |
Balance as of end of period | 42,926 |
Favorable lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 17,873 |
Amortization | (1,249) |
Balance as of end of period | 16,624 |
Domestic Servicing Rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 16,917 |
Changes in fair value due to changes in inputs and assumptions | (2,328) |
Balance as of end of period | $ 14,589 |
Secured Borrowings (Details)
Secured Borrowings (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($)Option | Feb. 29, 2020USD ($) | Jan. 31, 2020 | Sep. 30, 2020USD ($)facility | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Aug. 31, 2019USD ($) | |
Secured Borrowings | |||||||||||
Carrying Value | $ 9,615,892 | $ 9,615,892 | $ 9,615,892 | $ 8,906,048 | |||||||
Loss on extinguishment of debt | $ (4,624) | (2,377) | $ (10,738) | ||||||||
Payment of debt | 4,221,999 | $ 5,549,756 | |||||||||
Revolving credit facility | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | 120,000 | $ 120,000 | $ 120,000 | ||||||||
Revolving credit facility | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 3.00% | ||||||||||
Maturity Extended Credit Facility | |||||||||||
Secured Borrowings | |||||||||||
Number of facility maturities extended | facility | 7 | ||||||||||
Maximum borrowing capacity | 5,100,000 | $ 5,100,000 | $ 5,100,000 | ||||||||
Maturity period | 1 year | ||||||||||
Extension term | 2 years | ||||||||||
Commercial Lending Facility | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | 4,600,000 | $ 4,600,000 | 4,600,000 | ||||||||
Infrastructure Lending Facility | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | 500,000,000 | $ 500,000,000 | 500,000,000 | ||||||||
Woodstar I Portfolio | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.71% | ||||||||||
Maximum Facility Size | $ 217,100 | ||||||||||
Loss on extinguishment of debt | $ 2,200 | ||||||||||
Maturity period | 10 years | ||||||||||
Payment of debt | $ 117,000 | ||||||||||
Revolving Credit Agreement | |||||||||||
Secured Borrowings | |||||||||||
Maximum Facility Size | 300,000 | $ 300,000 | 300,000 | ||||||||
Maximum facility size subject to certain conditions | $ 650,000 | $ 650,000 | $ 650,000 | ||||||||
Residential Financing Facility | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | ||||||||
Maximum borrowing capacity | $ 250,000 | $ 250,000 | $ 250,000 | ||||||||
Maturity period | 2 years | ||||||||||
Extension term | 3 years | ||||||||||
Residential Financing Facility | One-month LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Basis spread on variable rate (as a percent) | 2.75% | 2.75% | 2.75% | ||||||||
Infrastructure Acquisition Facility | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.00% | ||||||||||
Property Mortgages - Fixed rate | |||||||||||
Secured Borrowings | |||||||||||
Maturity period | 7 years | ||||||||||
Collateralized Loan Obligation | |||||||||||
Secured Borrowings | |||||||||||
Principal Amount | $ 86,600 | ||||||||||
Debt Instrument Carrying Amount | 86,600 | ||||||||||
Principal amount of notes | 1,100,000 | ||||||||||
Principal amount of notes purchased by third-party investors | 936,400 | ||||||||||
Liquidation preference | $ 77,000 | ||||||||||
Additional Contribution to CLO | $ 88,100 | ||||||||||
Term loan facility | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | $ 396,000 | $ 396,000 | $ 396,000 | ||||||||
Term loan facility | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.50% | ||||||||||
Commercial Loans | |||||||||||
Secured Borrowings | |||||||||||
Maximum Facility Size | 8,700,000 | 8,700,000 | $ 8,700,000 | ||||||||
Carrying Value | $ 1,300 | $ 1,300 | $ 1,300 | ||||||||
Maximum borrowing capacity | 950,000 | ||||||||||
Commercial Loans | LIBOR | Weighted-average | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 2.02% | 2.02% | 2.02% | ||||||||
Residential Loans | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | $ 400,000 | ||||||||||
CMBS/RMBS | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | ||||||||
Carrying Value | $ 184,200 | $ 184,200 | $ 184,200 | ||||||||
Amount outstanding on a repurchase facility not subject to margin calls | 184,200 | 184,200 | 184,200 | ||||||||
Amount outstanding on repurchase facility | $ 41,300 | $ 41,300 | $ 41,300 | ||||||||
Pro rata share owned by a non-controlling partner in a consolidated joint venture | 49.00% | 49.00% | 49.00% | ||||||||
CMBS/RMBS | LIBOR | Weighted-average | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 1.57% | 1.57% | 1.57% | ||||||||
CMBS/RMBS | Certain Facilities | |||||||||||
Secured Borrowings | |||||||||||
Carrying Value | $ 285,900 | $ 285,900 | $ 285,900 | ||||||||
Rolling maturity period | 11 months | ||||||||||
Maturity period | 12 months | ||||||||||
Primary beneficiary | |||||||||||
Secured Borrowings | |||||||||||
Equity Method Investment, Ownership Percentage | 51.00% | ||||||||||
Secured Borrowings | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 12,855,019 | 12,855,019 | $ 12,855,019 | ||||||||
Maximum Facility Size | 17,797,273 | 17,797,273 | 17,797,273 | ||||||||
Principal Amount | 9,702,162 | 9,702,162 | 9,702,162 | 9,000,125 | |||||||
Unamortized net discount | (9,908) | (9,908) | (9,908) | (8,347) | |||||||
Unamortized deferred financing costs | (76,362) | (76,362) | (76,362) | (85,730) | |||||||
Carrying Value | 9,615,892 | 9,615,892 | 9,615,892 | 8,906,048 | |||||||
Debt Instrument Carrying Amount | 9,702,162 | 9,702,162 | 9,702,162 | 9,000,125 | |||||||
Increase in available borrowings | $ 250,000 | ||||||||||
Secured Borrowings | Revolving credit facility | |||||||||||
Secured Borrowings | |||||||||||
Equity interests in certain subsidiaries used to secure facilities | 3,700,000 | ||||||||||
Secured Borrowings | Other Secured Financing | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 4,602,579 | 4,602,579 | 4,602,579 | ||||||||
Maximum Facility Size | 7,049,191 | 7,049,191 | 7,049,191 | ||||||||
Principal Amount | 4,153,390 | 4,153,390 | 4,153,390 | 4,390,668 | |||||||
Debt Instrument Carrying Amount | 4,153,390 | 4,153,390 | 4,153,390 | 4,390,668 | |||||||
Secured Borrowings | Revolving Credit Agreement | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 50,194 | 50,194 | 50,194 | ||||||||
Maximum Facility Size | 650,000 | 650,000 | 650,000 | ||||||||
Principal Amount | 37,594 | 37,594 | 37,594 | 198,955 | |||||||
Debt Instrument Carrying Amount | 37,594 | 37,594 | $ 37,594 | 198,955 | |||||||
Secured Borrowings | Revolving Credit Agreement | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.25% | ||||||||||
Secured Borrowings | Commercial Financing Facility | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 95,077 | 95,077 | $ 95,077 | ||||||||
Maximum Facility Size | 76,721 | 76,721 | 76,721 | ||||||||
Principal Amount | 76,721 | 76,721 | 76,721 | ||||||||
Maturity period | 2 years | ||||||||||
Debt Instrument Carrying Amount | $ 76,721 | $ 76,721 | $ 76,721 | ||||||||
Number of extension options | Option | 3 | ||||||||||
Extended term / option | 1 year | ||||||||||
Secured Borrowings | Commercial Financing Facility | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 1.75% | ||||||||||
Secured Borrowings | Commercial Financing Facility | GBP LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 1.75% | ||||||||||
Secured Borrowings | Residential Financing Facility | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | ||||||||
Maximum Facility Size | $ 250,000 | $ 250,000 | $ 250,000 | ||||||||
Secured Borrowings | Infrastructure Acquisition Facility | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 710,572 | 710,572 | 710,572 | ||||||||
Maximum Facility Size | 701,370 | 701,370 | 701,370 | ||||||||
Principal Amount | 572,382 | 572,382 | 572,382 | 603,642 | |||||||
Debt Instrument Carrying Amount | 572,382 | 572,382 | 572,382 | 603,642 | |||||||
Secured Borrowings | Infrastructure Financing Facilities | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 583,319 | 583,319 | 583,319 | ||||||||
Maximum Facility Size | 1,250,000 | 1,250,000 | 1,250,000 | ||||||||
Principal Amount | 464,487 | 464,487 | 464,487 | 428,206 | |||||||
Maximum borrowing capacity | $ 750,000 | ||||||||||
Debt Instrument Carrying Amount | $ 464,487 | $ 464,487 | $ 464,487 | 428,206 | |||||||
Secured Borrowings | Infrastructure Financing Facilities | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.11% | ||||||||||
Secured Borrowings | Property Mortgages - Fixed rate | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 4.00% | 4.00% | 4.00% | ||||||||
Pledged Asset Carrying Value | $ 1,288,513 | $ 1,288,513 | $ 1,288,513 | ||||||||
Maximum Facility Size | 1,077,800 | 1,077,800 | 1,077,800 | ||||||||
Principal Amount | 1,077,800 | 1,077,800 | 1,077,800 | 1,196,492 | |||||||
Debt Instrument Carrying Amount | 1,077,800 | 1,077,800 | 1,077,800 | 1,196,492 | |||||||
Secured Borrowings | Property Mortgages - Variable rate | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 926,495 | 926,495 | 926,495 | ||||||||
Maximum Facility Size | 927,300 | 927,300 | 927,300 | ||||||||
Principal Amount | 908,906 | 908,906 | 908,906 | 696,503 | |||||||
Debt Instrument Carrying Amount | 908,906 | 908,906 | $ 908,906 | 696,503 | |||||||
Secured Borrowings | Property Mortgages - Variable rate | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.63% | ||||||||||
Secured Borrowings | Term Loan and Revolver | |||||||||||
Secured Borrowings | |||||||||||
Maximum Facility Size | 516,000 | 516,000 | $ 516,000 | ||||||||
Principal Amount | 396,000 | 396,000 | 396,000 | 399,000 | |||||||
Debt Instrument Carrying Amount | $ 396,000 | $ 396,000 | $ 396,000 | 399,000 | |||||||
Secured Borrowings | FHLB | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 1.99% | 1.99% | 1.99% | ||||||||
Pledged Asset Carrying Value | $ 948,409 | $ 948,409 | $ 948,409 | ||||||||
Maximum Facility Size | 1,600,000 | 1,600,000 | 1,600,000 | ||||||||
Principal Amount | 619,500 | 619,500 | 619,500 | 867,870 | |||||||
Debt Instrument Carrying Amount | 619,500 | 619,500 | 619,500 | 867,870 | |||||||
Secured Borrowings | Collateralized Loan Obligation | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | $ 2,000,000 | ||||||||||
Additional extension term | 4 years | ||||||||||
Secured Borrowings | First Mortgage And Mezzanine | |||||||||||
Secured Borrowings | |||||||||||
Principal Amount | 600,000 | 600,000 | 600,000 | ||||||||
Debt Instrument Carrying Amount | $ 600,000 | $ 600,000 | $ 600,000 | ||||||||
Secured Borrowings | First Mortgage And Mezzanine | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Interest rate (as a percent) | 3.34% | 3.34% | 3.34% | ||||||||
Secured Borrowings | First Mortgage And Mezzanine | LIBOR | Weighted-average | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.07% | ||||||||||
Secured Borrowings | Repurchase Agreements | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | $ 8,252,440 | $ 8,252,440 | $ 8,252,440 | ||||||||
Maximum Facility Size | 10,748,082 | 10,748,082 | 10,748,082 | ||||||||
Principal Amount | 5,548,772 | 5,548,772 | 5,548,772 | 4,609,457 | |||||||
Debt Instrument Carrying Amount | 5,548,772 | 5,548,772 | 5,548,772 | 4,609,457 | |||||||
Secured Borrowings | Commercial Loans | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 6,643,722 | 6,643,722 | 6,643,722 | ||||||||
Maximum Facility Size | 8,747,538 | 8,747,538 | 8,747,538 | ||||||||
Principal Amount | 4,556,665 | 4,556,665 | 4,556,665 | 3,640,620 | |||||||
Maximum borrowing capacity | $ 1,800,000 | ||||||||||
Debt Instrument Carrying Amount | 4,556,665 | 4,556,665 | 4,556,665 | 3,640,620 | |||||||
Increase in available borrowings | $ 200,000 | ||||||||||
Secured Borrowings | Residential Loans | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 37,046 | 37,046 | 37,046 | ||||||||
Maximum Facility Size | 400,000 | 400,000 | 400,000 | ||||||||
Principal Amount | 23,866 | 23,866 | 23,866 | 11,835 | |||||||
Debt Instrument Carrying Amount | 23,866 | 23,866 | $ 23,866 | 11,835 | |||||||
Secured Borrowings | Residential Loans | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.64% | ||||||||||
Secured Borrowings | Infrastructure Loans | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 244,862 | 244,862 | $ 244,862 | ||||||||
Maximum Facility Size | 500,000 | 500,000 | 500,000 | ||||||||
Principal Amount | 206,288 | 206,288 | 206,288 | 188,198 | |||||||
Debt Instrument Carrying Amount | 206,288 | 206,288 | $ 206,288 | 188,198 | |||||||
Secured Borrowings | Infrastructure Loans | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 2.00% | ||||||||||
Secured Borrowings | Conduit Loans | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 171,497 | 171,497 | $ 171,497 | ||||||||
Maximum Facility Size | 350,000 | 350,000 | 350,000 | ||||||||
Principal Amount | 127,162 | 127,162 | 127,162 | 86,575 | |||||||
Debt Instrument Carrying Amount | 127,162 | 127,162 | $ 127,162 | 86,575 | |||||||
Secured Borrowings | Conduit Loans | LIBOR | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 1.93% | ||||||||||
Secured Borrowings | CMBS/RMBS | |||||||||||
Secured Borrowings | |||||||||||
Pledged Asset Carrying Value | 1,155,313 | 1,155,313 | $ 1,155,313 | ||||||||
Maximum Facility Size | 750,544 | 750,544 | 750,544 | ||||||||
Principal Amount | 634,791 | 634,791 | 634,791 | 682,229 | |||||||
Maturity period | 12 months | ||||||||||
Debt Instrument Carrying Amount | $ 634,791 | $ 634,791 | $ 634,791 | $ 682,229 | |||||||
Secured Borrowings | CMBS/RMBS | One-month LIBOR | Minimum | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 1.35% | ||||||||||
Secured Borrowings | CMBS/RMBS | One-month LIBOR | Maximum | |||||||||||
Secured Borrowings | |||||||||||
Pricing margin (as a percent) | 1.85% | ||||||||||
Repurchase Agreements | Collateralized Loan Obligation | |||||||||||
Secured Borrowings | |||||||||||
Maximum borrowing capacity | $ 500,000 |
Secured Borrowings - Repurchase
Secured Borrowings - Repurchase Agreements (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Secured Borrowings | ||||
Secured Borrowings | ||||
Amortization of deferred financing costs | $ 9.5 | $ 8.1 | $ 27.3 | $ 24.9 |
Repurchase Agreements | ||||
Secured Borrowings | ||||
Percentage of repurchase agreements for which margin calls are limited to collateral specific credit marks | 75.00% | 75.00% | ||
Percentage of repurchase agreements containing margin call provisions for general capital market activity | 25.00% | 25.00% | ||
Percentage of repurchase agreements containing margin call provisions that pertain to loans held-for-sale | 17.00% | 17.00% |
Secured Borrowings- Collaterali
Secured Borrowings- Collateralized Loan Obligations (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Aug. 31, 2020USD ($) | Sep. 30, 2020USD ($)item | Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($)item | Aug. 31, 2019USD ($) | |
Summary of CLO | |||||
Carrying value | $ 929,931 | $ 929,931 | $ 928,060 | ||
LIBOR | Collateral assets | |||||
Summary of CLO | |||||
Spread (as a percent) | 3.83% | 3.34% | |||
LIBOR | Financing | |||||
Summary of CLO | |||||
Spread (as a percent) | 1.64% | 1.65% | |||
Collateralized Loan Obligation | |||||
Summary of CLO | |||||
Amount issued | $ 1,100,000 | ||||
Principal Amount | 86,600 | ||||
Liquidation preference | $ 77,000 | ||||
Incurred debt issuance costs | $ 9,200 | ||||
Amortization of deferred financing costs | 700 | $ 1,900 | |||
Deferred financing costs, net of amortization | $ 6,400 | $ 6,400 | $ 8,300 | ||
Collateralized Loan Obligation | Collateral assets | |||||
Summary of CLO | |||||
Count | item | 24 | 24 | 20 | ||
Amount issued | $ 1,099,672 | $ 1,099,672 | $ 1,073,504 | ||
Carrying value | $ 1,099,558 | $ 1,099,558 | $ 1,073,504 | ||
Percentage of loans earning a fixed rate | 9.00% | ||||
Fixed weighted average interest | 6.84% | 6.84% | |||
Collateralized Loan Obligation | Financing | |||||
Summary of CLO | |||||
Count | item | 1 | 1 | 1 | ||
Amount issued | $ 936,375 | $ 936,375 | $ 936,375 | ||
Carrying value | $ 929,931 | $ 929,931 | $ 928,060 |
Secured Borrowings - Principal
Secured Borrowings - Principal Repayments (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Collateralized Loan Obligation | |
Repayment of secured financings | |
Thereafter | $ 936,375 |
Total | 936,375 |
Secured Borrowings | |
Repayment of secured financings | |
2020 (remainder of) | 391,571 |
2021 | 1,546,297 |
2022 | 1,912,033 |
2023 | 1,814,813 |
2024 | 1,079,443 |
Thereafter | 3,894,380 |
Total | 10,638,537 |
Repurchase Agreements | |
Repayment of secured financings | |
2020 (remainder of) | 80,429 |
2021 | 764,290 |
2022 | 1,364,073 |
2023 | 1,108,155 |
2024 | 843,591 |
Thereafter | 1,388,234 |
Total | 5,548,772 |
Other Secured Financing | |
Repayment of secured financings | |
2020 (remainder of) | 311,142 |
2021 | 782,007 |
2022 | 547,960 |
2023 | 706,658 |
2024 | 235,852 |
Thereafter | 1,569,771 |
Total | $ 4,153,390 |
Unsecured Senior Notes (Details
Unsecured Senior Notes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Unsecured Senior Notes | |||||
Interest expense | $ 95,981,000 | $ 123,156,000 | $ 317,499,000 | $ 387,954,000 | |
Principal amount of notes, basis for conversion | $ 1,000 | $ 1,000 | |||
Closing share price (in dollars per share) | $ 15.09 | $ 15.09 | |||
2021 Senior Notes 3.63% | |||||
Unsecured Senior Notes | |||||
Coupon Rate (as a percent) | 3.63% | 3.63% | |||
Effective Rate (as a percent) | 3.89% | 3.89% | |||
Remaining Period of Amortization | 3 months 18 days | ||||
Principal Amount | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | ||
2021 Senior Notes 3.63% | LIBOR | |||||
Unsecured Senior Notes | |||||
Pricing margin (as a percent) | 1.28% | ||||
2021 Senior Notes 5.00% | |||||
Unsecured Senior Notes | |||||
Coupon Rate (as a percent) | 5.00% | 5.00% | |||
Effective Rate (as a percent) | 5.32% | 5.32% | |||
Remaining Period of Amortization | 1 year 2 months 12 days | ||||
Principal Amount | $ 700,000,000 | $ 700,000,000 | 700,000,000 | ||
2023 Notes | |||||
Unsecured Senior Notes | |||||
Coupon Rate (as a percent) | 4.38% | 4.38% | |||
Effective Rate (as a percent) | 4.86% | 4.86% | |||
Remaining Period of Amortization | 2 years 6 months | ||||
Principal Amount | $ 250,000,000 | $ 250,000,000 | 250,000,000 | ||
Conversion Rate | 38.5959 | ||||
Conversion price (in dollars per share) | $ 25.91 | $ 25.91 | |||
Closing share price (in dollars per share) | $ 15.09 | $ 15.09 | |||
If-converted value | $ 145,600,000 | $ 145,600,000 | |||
Amount by which if-converted value of the Notes are less than principal amount | $ 104,400,000 | ||||
2025 Senior Notes | |||||
Unsecured Senior Notes | |||||
Coupon Rate (as a percent) | 4.75% | 4.75% | |||
Effective Rate (as a percent) | 5.04% | 5.04% | |||
Remaining Period of Amortization | 4 years 6 months | ||||
Principal Amount | $ 500,000,000 | $ 500,000,000 | 500,000,000 | ||
2025 Senior Notes | LIBOR | |||||
Unsecured Senior Notes | |||||
Pricing margin (as a percent) | 2.53% | ||||
Principal Amount | 470,000,000 | $ 470,000,000 | |||
Unsecured Senior Notes | |||||
Unsecured Senior Notes | |||||
Principal Amount | 1,950,000,000 | 1,950,000,000 | 1,950,000,000 | ||
Unamortized deferred financing costs | (3,829,000) | (3,829,000) | (5,624,000) | ||
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes | 3,755,000 | 3,755,000 | 3,755,000 | ||
Carrying amount of debt components | 1,934,555,000 | 1,934,555,000 | 1,928,622,000 | ||
Convertible Senior Notes | |||||
Unsecured Senior Notes | |||||
Unamortized discount | (2,826,000) | (2,826,000) | (3,610,000) | ||
Interest expense | 3,100,000 | $ 3,100,000 | 9,200,000 | $ 9,300,000 | |
Senior Notes | |||||
Unsecured Senior Notes | |||||
Unamortized discount | $ (8,790,000) | $ (8,790,000) | $ (12,144,000) |
Loan Securitization_Sale Acti_3
Loan Securitization/Sale Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investing and Servicing Segment | Loans held-for-sale, commercial | ||||
Loan Transfer Activities | ||||
Face Amount | $ 151,295 | $ 262,528 | $ 487,130 | $ 787,160 |
Proceeds | 157,497 | 274,714 | 509,890 | 826,932 |
Investing and Servicing Segment | Loans held-for-sale, residential | ||||
Loan Transfer Activities | ||||
Face Amount | 478,911 | 545,976 | 1,443,691 | 886,187 |
Proceeds | 499,321 | 569,590 | 1,487,761 | 921,602 |
Commercial and Residential Lending Segment | ||||
Loan Transfers Accounted for as Secured Borrowings | ||||
Net gains (losses) on the sale of loan qualifying for sales treatment | 500 | 1,000 | 3,500 | |
Commercial and Residential Lending Segment | Loans held-for-sale, commercial | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 53,288 | 399,132 | 554,710 | |
Proceeds | 0 | 53,249 | 396,078 | 551,700 |
Commercial and Residential Lending Segment | Loans held-for-sale, residential | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 1,684 | 550 | 25,526 | |
Proceeds | 1,743 | 604 | 26,260 | |
Infrastructure Lending Segment | ||||
Loan Transfer Activities | ||||
Face Amount | 0 | 47,300 | 38,700 | 404,100 |
Proceeds | 47,000 | 38,400 | 393,300 | |
Loan Transfers Accounted for as Secured Borrowings | ||||
Net gains (losses) on the sale of loan qualifying for sales treatment | $ 0 | 300 | 3,100 | |
Cash consideration | 3,100 | |||
Decrease in fair value within loss on derivative financial instruments | $ 2,700 | |||
First Mortgage Loans | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 230,900 | 168,200 | ||
Proceeds | $ 224,100 | $ 172,000 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activity - Designated and Non-Designated Hedges (Details) € in Thousands, £ in Thousands, $ in Thousands, $ in Thousands | Sep. 30, 2020EUR (€)item | Sep. 30, 2020GBP (£)item | Sep. 30, 2020AUD ($)item | Sep. 30, 2020USD ($)item |
Derivatives | ||||
Number of contracts | 513 | 513 | 513 | 513 |
Foreign exchange contracts | EUR | Long | ||||
Derivatives | ||||
Number of contracts | 1 | 1 | 1 | 1 |
Aggregate notional amount | € | € 1,915 | |||
Foreign exchange contracts | EUR | Short | ||||
Derivatives | ||||
Number of contracts | 289 | 289 | 289 | 289 |
Aggregate notional amount | € | € 250,530 | |||
Foreign exchange contracts | AUD | Short | ||||
Derivatives | ||||
Number of contracts | 13 | 13 | 13 | 13 |
Aggregate notional amount | $ | $ 126,546 | |||
Foreign exchange contracts | GBP | Short | ||||
Derivatives | ||||
Number of contracts | 120 | 120 | 120 | 120 |
Aggregate notional amount | £ | £ 373,948 | |||
Interest rate swaps - Paying fixed rates | USD | ||||
Derivatives | ||||
Number of contracts | 56 | 56 | 56 | 56 |
Aggregate notional amount | $ | $ 1,755,593 | |||
Interest rate swaps - Receiving fixed rates | USD | ||||
Derivatives | ||||
Number of contracts | 2 | 2 | 2 | 2 |
Aggregate notional amount | $ | $ 970,000 | |||
Interest Rate Swap Guarantees | USD | ||||
Derivatives | ||||
Number of contracts | 6 | 6 | 6 | 6 |
Aggregate notional amount | $ | $ 383,080 | |||
Interest rate caps | USD | ||||
Derivatives | ||||
Number of contracts | 22 | 22 | 22 | 22 |
Aggregate notional amount | $ | $ 951,462 | |||
Credit spread instrument | USD | ||||
Derivatives | ||||
Number of contracts | 4 | 4 | 4 | 4 |
Aggregate notional amount | $ | $ 69,000 |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activity - Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 64,825 | $ 28,943 |
Fair Value of Derivatives in a Liability Position | 13,452 | 8,740 |
Interest rate swaps | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 38,479 | 14,385 |
Fair Value of Derivatives in a Liability Position | 3,097 | |
Interest Rate Swap Guarantees | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in a Liability Position | 958 | 614 |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 25,805 | 14,558 |
Fair Value of Derivatives in a Liability Position | 9,397 | 7,834 |
Credit spread instrument | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 541 | |
Fair Value of Derivatives in a Liability Position | $ 292 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivatives | ||||
(Loss) gain on derivative financial instruments, net | $ (28,097) | $ 21,933 | $ (34,485) | $ 19,694 |
Interest rate swaps | ||||
Derivatives | ||||
(Loss) gain on derivative financial instruments, net | 259 | (7,898) | (52,129) | (21,733) |
Interest rate swap guarantees | ||||
Derivatives | ||||
(Loss) gain on derivative financial instruments, net | 260 | (468) | (345) | (3,640) |
Foreign exchange contracts | ||||
Derivatives | ||||
(Loss) gain on derivative financial instruments, net | (28,514) | 30,426 | 17,644 | 46,116 |
Credit spread instrument | ||||
Derivatives | ||||
(Loss) gain on derivative financial instruments, net | $ (102) | $ (127) | $ 345 | $ (1,049) |
Offsetting Assets and Liabili_3
Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Net Amounts of Assets Presented in the Statement of Financial Position | $ 64,825 | $ 28,943 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 5,562,224 | 4,618,197 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 5,562,224 | 4,618,197 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 5,558,169 | 4,614,769 |
Cash Collateral Pledged | 3,097 | 292 |
Net Amount | 958 | 3,136 |
Derivatives | ||
Assets | ||
Gross Amounts of Recognized Assets | 64,825 | 28,943 |
Net Amounts of Assets Presented in the Statement of Financial Position | 64,825 | 28,943 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 9,397 | 5,312 |
Cash Collateral Received | 39,842 | 14,208 |
Net Amount | 15,586 | 9,423 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 13,452 | 8,740 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 13,452 | 8,740 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 9,397 | 5,312 |
Cash Collateral Pledged | 3,097 | 292 |
Net Amount | 958 | 3,136 |
Repurchase Agreements | ||
Liabilities | ||
Gross Amounts of Recognized Liabilities | 5,548,772 | 4,609,457 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 5,548,772 | 4,609,457 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 5,548,772 | $ 4,609,457 |
Variable Interest Entities - As
Variable Interest Entities - Assets and Liabilities of Consolidated CLO (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Variable interest entities | ||
Liabilities | $ 75,731,946 | $ 72,905,322 |
Total Assets | 80,617,639 | 78,042,336 |
Primary beneficiary | ||
Variable interest entities | ||
Liabilities | 62,876,265 | 60,743,494 |
Total Assets | 64,477,475 | 62,187,175 |
Collateralized Loan Obligation | Primary beneficiary | ||
Variable interest entities | ||
Loans held-for-investment, net | 1,099,558 | 1,073,504 |
Accounts payable, accrued expenses and other liabilities | 621 | 1,362 |
Collateralized loan obligations, net | 929,931 | 928,060 |
Accrued interest receivable | 3,082 | 3,129 |
Other assets | 328 | 26,496 |
Liabilities | 930,552 | 929,422 |
Total Assets | $ 1,102,968 | $ 1,103,129 |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Thousands | Sep. 30, 2020USD ($)item | Jan. 31, 2020 | Dec. 31, 2019USD ($) |
Variable interest entities | |||
Total Assets | $ 80,617,639 | $ 78,042,336 | |
Total Liabilities | $ 75,731,946 | 72,905,322 | |
Number of collateralized debt obligation | item | 0 | ||
Investment in unconsolidated entities | $ 104,384 | 84,329 | |
Primary beneficiary | |||
Variable interest entities | |||
Total Assets | 64,477,475 | 62,187,175 | |
Total Liabilities | 62,876,265 | $ 60,743,494 | |
Equity interest | 51.00% | ||
Primary beneficiary | ASU 2015-02 | |||
Variable interest entities | |||
Total Assets | 97,300 | ||
Total Liabilities | 53,800 | ||
Primary beneficiary | CMBS Venture Holdings | |||
Variable interest entities | |||
Total Assets | 332,400 | ||
Total Liabilities | 84,800 | ||
Equity interest | 51.00% | ||
Primary beneficiary | SPT Dolphin | ASU 2015-02 | |||
Variable interest entities | |||
Total Assets | 676,500 | ||
Total Liabilities | $ 446,800 | ||
Not primary beneficiary | |||
Variable interest entities | |||
Number of CDO structures currently in default | item | 5 | ||
Maximum risk of loss related to VIEs, on fair value basis | $ 23,500 | ||
Not primary beneficiary | ASU 2015-02 | Measurement Period Adjustments | |||
Variable interest entities | |||
Investment in unconsolidated entities | 21,800 | ||
Not primary beneficiary | Securitization SPEs | |||
Variable interest entities | |||
Debt obligations to beneficial interest holders, unpaid principal balances | $ 4,100,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Apr. 30, 2020 | Sep. 30, 2019 | Apr. 30, 2018 | Mar. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Related-Party Transactions | |||||||||
Base management fee payable | $ 19.2 | $ 19.2 | $ 19.3 | ||||||
Granted (in shares) | 1,014,753 | ||||||||
Award vesting period | 3 years | 3 years | |||||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||||||
Related-Party Transactions | |||||||||
Granted (in shares) | 1,200,000 | 775,000 | 1,000,000 | ||||||
Award vesting period | 3 years | ||||||||
Share-based compensation expense, before tax | 3.4 | $ 8.8 | $ 12 | $ 15.2 | |||||
Manager | |||||||||
Related-Party Transactions | |||||||||
Base management fee incurred | $ 19.1 | 19.2 | 19.2 | 57.4 | 57.7 | ||||
Base management fee in shares of common stock | 1,422,143 | ||||||||
Incentive fee incurred | 0 | 1.8 | 15.8 | 2 | |||||
Incentive fees payable | 0 | 0 | 18.1 | ||||||
Executive compensation and other reimbursable expenses | 1.5 | $ 1.9 | 5.2 | $ 5.8 | |||||
Executive compensation and other reimbursable expense payable | $ 2.9 | $ 2.9 | $ 3.5 | ||||||
Manager | Restricted stock units | |||||||||
Related-Party Transactions | |||||||||
Granted (in shares) | 0 | 0 | 341,635 | 182,861 | |||||
Grant date fair value | $ 3.9 | $ 4.1 | |||||||
Award vesting period | 3 years | ||||||||
Share-based compensation expense, before tax | $ 0.1 | $ 1.2 | $ 2.5 | $ 3 |
Related-Party Transactions - In
Related-Party Transactions - Investments in Loans and Securities and Other Arrangements (Details) $ in Thousands, € in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2020ft²$ / ft² | Feb. 29, 2020USD ($)Option | Jan. 31, 2020USD ($) | Jan. 31, 2020EUR (€) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)property | Sep. 30, 2019USD ($) | Apr. 30, 2020USD ($) | |
Related-Party Transactions | |||||||||
Acquisitions and originations of mortgage financing | $ 4,168,949 | $ 5,607,829 | |||||||
SEREF | Mezzanine Loans | |||||||||
Related-Party Transactions | |||||||||
Payments to Fund Long-term Loans to Related Parties | € | € 70.3 | ||||||||
Acquisitions and originations of mortgage financing | € | € 35.2 | ||||||||
Residential mortgage originator | |||||||||
Related-Party Transactions | |||||||||
Subordinated loan to a residential mortgage | $ 4,500 | $ 4,500 | |||||||
Highmark Residential | |||||||||
Related-Party Transactions | |||||||||
Number of additional properties under management | property | 32 | ||||||||
Payments to related party | 400 | $ 400 | $ 1,400 | $ 1,100 | |||||
Affiliates of Manager | Origination Of Loan For Development And Recapitalization Of Luxury Cabin Rentals | |||||||||
Related-Party Transactions | |||||||||
Payments to Fund Long-term Loans to Related Parties | $ 3,500 | ||||||||
Affiliates of Manager | Origination Of First Mortgage Loan | |||||||||
Related-Party Transactions | |||||||||
Payments to Fund Long-term Loans to Related Parties | $ 99,000 | ||||||||
Interest rate | 10.50% | ||||||||
Term | 36 months | ||||||||
Number of options | Option | 2 | ||||||||
Renewal term | 1 year | ||||||||
Partial repayment on a first mortgage and mezzanine loan received | 245,000 | ||||||||
Affiliates Of Chairman And CEO | Office Lease Agreement With Affiliate Of Chairman And CEO | |||||||||
Related-Party Transactions | |||||||||
Area of office space | ft² | 74,000 | ||||||||
Lease Term | 15 years | ||||||||
Operating Lease, Annual Base Rent Per Square Foot | $ / ft² | 52 | ||||||||
Operating Lease, Percentage Of Increase in Annual Base Rent | 3.00% | ||||||||
Security Deposit | $ 1,900 | ||||||||
Loans held-for-sale, residential | Residential mortgage originator | |||||||||
Related-Party Transactions | |||||||||
Acquisitions and originations of mortgage financing | $ 57,600 | $ 185,000 |
Stockholders' Equity and Non-_3
Stockholders' Equity and Non-Controlling Interests (Details) $ / shares in Units, $ in Thousands | Sep. 16, 2020$ / shares | Jun. 16, 2020$ / shares | Feb. 25, 2020$ / shares | Feb. 29, 2020USD ($) | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2020USD ($)item$ / sharesshares | Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018shares |
Stockholders' Equity | ||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 | |||
Value of common stock issued to settle redemption | $ 400 | |||||||||
Value settled for cash | 100 | |||||||||
Cash amount settled | $ 1,300 | |||||||||
Shares issued under ATM Agreement | shares | 0 | 0 | ||||||||
Authorized amount of share repurchases | $ 400,000 | |||||||||
Period for repurchase of common stock | 1 year | |||||||||
Common stock repurchased (in shares) | shares | 1,925,421 | |||||||||
Repurchase of common stock | $ 28,830 | |||||||||
Debt repurchased amount | $ 0 | 0 | ||||||||
Remaining capacity to repurchase common stock | 371,200 | 371,200 | ||||||||
Net income attributable to non-controlling interests | $ 12,900 | $ 9,605 | $ 26,705 | $ 21,160 | ||||||
Class A Units | ||||||||||
Stockholders' Equity | ||||||||||
Number of units outstanding | shares | 10,500,000 | 10,500,000 | ||||||||
Value of shares issued to settle redemption | $ 500 | |||||||||
CMBS JV | ||||||||||
Stockholders' Equity | ||||||||||
Non-controlling interest | $ 127,800 | 127,800 | $ 175,600 | |||||||
CMBS JV | Joint Venture Partner | ||||||||||
Stockholders' Equity | ||||||||||
Equity Method Investment, Ownership Percentage | 49.00% | |||||||||
Woodstar II Portfolio | Class A Units | ||||||||||
Stockholders' Equity | ||||||||||
Net income attributable to non-controlling interests | 5,100 | $ 5,200 | $ 15,300 | $ 16,300 | ||||||
Woodstar II Portfolio | Class A Units | SPT Dolphin | ||||||||||
Stockholders' Equity | ||||||||||
Shares issued | shares | 1,800,000 | |||||||||
Shares issued | shares | 10,200,000 | |||||||||
Right to receive additional shares | shares | 1,900,000 | 1,900,000 | ||||||||
Number of common stock per unit | item | 1 | |||||||||
Woodstar II Portfolio | Class A Units | SPT Dolphin | Non-Controlling Interests | ||||||||||
Stockholders' Equity | ||||||||||
Redemption of units | shares | 225,400,000 | 235,900,000 | ||||||||
Woodstar II Portfolio | CMBS JV | Class A Units | ||||||||||
Stockholders' Equity | ||||||||||
Net income attributable to non-controlling interests | $ 6,800 | $ 7,600 |
Stockholders' Equity and Non-_4
Stockholders' Equity and Non-Controlling Interests - Equity Incentive Plans (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Apr. 30, 2018 | Mar. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | May 31, 2017 | |
Equity Incentive Plans | ||||||||
Granted (in shares) | 1,014,753 | |||||||
Award vesting period | 3 years | 3 years | ||||||
Vested immediately on the grant date | ||||||||
Equity Incentive Plans | ||||||||
Granted (in shares) | 218,898 | |||||||
Remaining vesting | ||||||||
Equity Incentive Plans | ||||||||
Award vesting period | 3 years | |||||||
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 | 6,500,000 | 6,500,000 | ||||||
Starwood Property Trust, Inc. Equity Plan | ||||||||
Equity Incentive Plans | ||||||||
Granted (in shares) | 1,014,753 | |||||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | ||||||||
Equity Incentive Plans | ||||||||
Share-based compensation expense, before tax | $ 3,400 | $ 8,800 | $ 12,000 | $ 15,200 | ||||
Granted (in shares) | 1,200,000 | 775,000 | 1,000,000 | |||||
Awards granted, fair value | $ 29,484 | $ 16,329 | $ 22,240 | |||||
Award vesting period | 3 years |
Stockholders' Equity and Non-_5
Stockholders' Equity and Non-Controlling Interests - Non-Vested Shares (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 2,718,767 |
Granted (in shares) | 1,014,753 |
Vested (in shares) | (1,163,086) |
Forfeited (in shares) | (20,960) |
Balance at the end of the period (in shares) | 2,549,474 |
Weighted Average Grant Date Fair Value (per share) | |
Balance at the beginning of period (in dollars per share) | $ / shares | $ 22.74 |
Granted (in dollars per share) | $ / shares | 10.98 |
Vested (in dollars per share) | $ / shares | 22.50 |
Forfeited (in dollars per share) | $ / shares | 14.23 |
Balance at the end of period (in dollars per share) | $ / shares | $ 18.23 |
Starwood Property Trust, Inc. Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 1,413,170 |
Granted (in shares) | 1,014,753 |
Vested (in shares) | (640,727) |
Forfeited (in shares) | (20,960) |
Balance at the end of the period (in shares) | 1,766,236 |
Starwood Property Trust, Inc. Manager Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 1,305,597 |
Vested (in shares) | (522,359) |
Balance at the end of the period (in shares) | 783,238 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | $ 151,834 | $ 140,396 | $ 224,721 | $ 337,795 |
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,721) | (1,205) | (3,422) | (2,779) |
Basic earnings | 150,113 | 139,191 | 221,299 | 335,016 |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | 151,834 | 140,396 | 224,721 | 337,795 |
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,721) | (1,205) | (3,422) | (2,779) |
Add: Undistributed earnings to participating shares | 663 | 188 | ||
Less: Undistributed earnings reallocated to participating shares | (642) | (182) | ||
Diluted earnings | $ 153,189 | $ 142,268 | $ 221,299 | $ 344,322 |
Number of Shares: | ||||
Basic - Average shares outstanding | 282,596 | 279,992 | 281,686 | 278,934 |
Effect of dilutive securities - Convertible Notes (in shares) | 9,649 | 9,649 | 9,857 | |
Effect of dilutive securities - Contingently issuable shares (in shares) | 38 | 38 | ||
Effect of dilutive securities - Unvested non-participating shares | 213 | 233 | 182 | 192 |
Diluted - Average shares outstanding | 292,458 | 289,912 | 281,868 | 289,021 |
Basic: | ||||
Basic (in dollars per share) | $ 0.53 | $ 0.50 | $ 0.79 | $ 1.20 |
Diluted: | ||||
Diluted (in dollars per share) | $ 0.52 | $ 0.49 | $ 0.79 | $ 1.19 |
Convertible Senior Notes | ||||
Continuing Operations: | ||||
Add: Interest expense on Convertible Notes | $ 3,055 | $ 3,071 | $ 9,306 |
Earnings per Share - Dilutive a
Earnings per Share - Dilutive and Antidilutive securities (Details) shares in Millions, item in Millions | 9 Months Ended | |
Sep. 30, 2020itemshares | Sep. 30, 2019itemshares | |
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 | 10.5 | 10.9 |
Restricted stock | ||
Antidilutive securities and effect of dilutive securities | ||
Number of anti-dilutive common shares excluded from the calculation of diluted income per share | shares | 12.8 | 13.4 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in AOCI by component | ||||
Beginning balance | $ 42,866 | $ 57,124 | $ 50,932 | $ 58,660 |
OCI before reclassifications | (581) | (4,688) | (8,647) | (6,224) |
Amounts reclassified from AOCI | (59) | (59) | ||
Net period OCI | (581) | (4,747) | (8,647) | (6,283) |
Ending balance | 42,285 | 52,377 | 42,285 | 52,377 |
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | ||||
Changes in AOCI by component | ||||
Beginning balance | 42,930 | 53,049 | 50,996 | 53,515 |
OCI before reclassifications | (581) | (520) | (8,647) | (986) |
Amounts reclassified from AOCI | (59) | (59) | ||
Net period OCI | (581) | (579) | (8,647) | (1,045) |
Ending balance | 42,349 | 52,470 | 42,349 | 52,470 |
Foreign Currency Translation | ||||
Changes in AOCI by component | ||||
Beginning balance | (64) | 4,075 | (64) | 5,145 |
OCI before reclassifications | (4,168) | (5,238) | ||
Net period OCI | (4,168) | (5,238) | ||
Ending balance | $ (64) | $ (93) | $ (64) | $ (93) |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets and liabilities measured at fair value | ||
Permitted reinvestment under static investment in VIEs | $ 0 | |
Marketable securities | 745,113 | $ 810,238 |
Domestic servicing rights | 14,589 | 16,917 |
Derivative assets | 64,825 | 28,943 |
Total Assets | 80,617,639 | 78,042,336 |
Total Liabilities | 75,731,946 | 72,905,322 |
Derivative liabilities | 13,452 | 8,740 |
Fair value measurements on recurring basis | ||
Assets and liabilities measured at fair value | ||
Derivative assets | 64,825 | 28,943 |
Total Assets | 66,029,786 | 63,908,829 |
Derivative liabilities | 13,452 | 8,740 |
Total Liabilities | 62,889,717 | 60,752,234 |
Fair value measurements on recurring basis | Loans held-for-sale | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 1,269,080 | 1,436,194 |
Fair value measurements on recurring basis | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 170,270 | 189,576 |
Fair value measurements on recurring basis | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 23,489 | 37,360 |
Fair value measurements on recurring basis | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 10,058 | 12,664 |
Fair value measurements on recurring basis | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 14,589 | 16,917 |
Fair value measurements on recurring basis | Level I | ||
Assets and liabilities measured at fair value | ||
Total Assets | 10,058 | 12,664 |
Fair value measurements on recurring basis | Level I | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 10,058 | 12,664 |
Fair value measurements on recurring basis | Level II | ||
Assets and liabilities measured at fair value | ||
Derivative assets | 64,825 | 28,943 |
Total Assets | 66,465 | 41,295 |
Derivative liabilities | 13,452 | 8,740 |
Total Liabilities | 60,574,411 | 58,214,842 |
Fair value measurements on recurring basis | Level II | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 1,640 | 12,352 |
Fair value measurements on recurring basis | Level III | ||
Assets and liabilities measured at fair value | ||
Total Assets | 65,953,263 | 63,854,870 |
Total Liabilities | 2,315,306 | 2,537,392 |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 1,269,080 | 1,436,194 |
Fair value measurements on recurring basis | Level III | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 170,270 | 189,576 |
Fair value measurements on recurring basis | Level III | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 21,849 | 25,008 |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 14,589 | 16,917 |
Primary beneficiary | ||
Assets and liabilities measured at fair value | ||
Total Assets | 64,477,475 | 62,187,175 |
Total Liabilities | 62,876,265 | 60,743,494 |
Primary beneficiary | Fair value measurements on recurring basis | VIE Assets | ||
Assets and liabilities measured at fair value | ||
Total Assets | 64,477,475 | 62,187,175 |
Primary beneficiary | Fair value measurements on recurring basis | VIE liabilities | ||
Assets and liabilities measured at fair value | ||
Total Liabilities | 62,876,265 | 60,743,494 |
Primary beneficiary | Fair value measurements on recurring basis | Level II | VIE liabilities | ||
Assets and liabilities measured at fair value | ||
Total Liabilities | 60,560,959 | 58,206,102 |
Primary beneficiary | Fair value measurements on recurring basis | Level III | VIE Assets | ||
Assets and liabilities measured at fair value | ||
Total Assets | 64,477,475 | 62,187,175 |
Primary beneficiary | Fair value measurements on recurring basis | Level III | VIE liabilities | ||
Assets and liabilities measured at fair value | ||
Total Liabilities | $ 2,315,306 | $ 2,537,392 |
Fair Value - Level III (Details
Fair Value - Level III (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Net accretion | $ 9,362 | $ 10,338 | ||
Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | $ 63,150,598 | $ 56,920,033 | 61,317,478 | 52,931,064 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (171,175) | (320,649) | (1,101,983) | 156,382 |
Included in earnings: Net accretion | 2,633 | 2,446 | 7,967 | 7,484 |
Included in OCI | (581) | (578) | (8,647) | (1,044) |
Purchases / Originations | 1,013,158 | 1,128,718 | 1,900,738 | 2,780,952 |
Sales | (656,818) | (846,047) | (2,006,195) | (1,778,772) |
Issuances | (22,958) | (24,376) | (81,681) | |
Cash repayments / receipts | (49,862) | (56,358) | (178,289) | (133,523) |
Transfers into Level III | (485,332) | (122,911) | (1,242,539) | (1,369,155) |
Transfers out of Level III | 322,888 | 93,914 | 1,455,093 | 524,733 |
Consolidations of VIEs | 512,300 | 1,914,330 | 3,518,562 | 5,910,615 |
Deconsolidations of VIEs | 148 | (38,016) | 148 | (295,131) |
Balance at the end of the period | 63,637,957 | 58,651,924 | 63,637,957 | 58,651,924 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (212,649) | (346,232) | (1,093,344) | 103,833 |
Amount of total (losses) gains included in OCI attributable to assets still held at period end | (581) | (8,647) | ||
Level III | Loans held-for-sale | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 894,613 | 1,372,398 | 1,436,194 | 671,282 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 61,384 | 32,512 | 79,700 | 65,669 |
Purchases / Originations | 1,013,158 | 1,123,553 | 1,900,738 | 2,775,787 |
Sales | (656,818) | (846,047) | (1,998,255) | (1,774,794) |
Cash repayments / receipts | (43,257) | (33,054) | (149,297) | (88,582) |
Transfers out of Level III | (225,813) | (225,813) | ||
Balance at the end of the period | 1,269,080 | 1,423,549 | 1,269,080 | 1,423,549 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 8,864 | 4,537 | 8,551 | 6,775 |
Level III | RMBS | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 174,281 | 200,874 | 189,576 | 209,079 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Net accretion | 2,633 | 2,446 | 7,967 | 7,484 |
Included in OCI | (581) | (578) | (8,647) | (1,044) |
Cash repayments / receipts | (6,063) | (7,445) | (18,626) | (20,222) |
Balance at the end of the period | 170,270 | 195,297 | 170,270 | 195,297 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 2,633 | 2,390 | 7,967 | 7,397 |
Amount of total (losses) gains included in OCI attributable to assets still held at period end | (581) | (8,647) | ||
Level III | CMBS | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 21,891 | 34,283 | 25,008 | 25,228 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (56) | 432 | 5,331 | 1,153 |
Purchases / Originations | 5,165 | 5,165 | ||
Sales | (7,940) | (3,978) | ||
Cash repayments / receipts | (213) | (3,343) | (777) | (8,933) |
Transfers into Level III | 5,350 | |||
Deconsolidations of VIEs | 227 | (657) | 227 | 11,895 |
Balance at the end of the period | 21,849 | 35,880 | 21,849 | 35,880 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (56) | 434 | (1,055) | 101 |
Level III | Domestic Servicing Rights | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 13,955 | 18,874 | 16,917 | 20,557 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 634 | (625) | (2,328) | (2,308) |
Balance at the end of the period | 14,589 | 18,249 | 14,589 | 18,249 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 634 | (625) | (2,328) | (2,308) |
Level III | VIE Assets | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 64,175,387 | 57,667,606 | 62,187,175 | 53,446,364 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (202,560) | (380,973) | (1,291,705) | 39,961 |
Consolidations of VIEs | 512,300 | 1,999,780 | 3,589,657 | 6,103,915 |
Deconsolidations of VIEs | (7,652) | (37,359) | (7,652) | (341,186) |
Balance at the end of the period | 64,477,475 | 59,249,054 | 64,477,475 | 59,249,054 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (194,147) | (380,973) | (1,213,498) | 39,961 |
Level III | VIE liabilities | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | (2,129,529) | (2,374,002) | (2,537,392) | (1,441,446) |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (30,577) | 28,005 | 107,019 | 51,907 |
Issuances | (22,958) | (24,376) | (81,681) | |
Cash repayments / receipts | (329) | (12,516) | (9,589) | (15,786) |
Transfers into Level III | (485,332) | (122,911) | (1,242,539) | (1,374,505) |
Transfers out of Level III | 322,888 | 319,727 | 1,455,093 | 750,546 |
Consolidations of VIEs | (85,450) | (71,095) | (193,300) | |
Deconsolidations of VIEs | 7,573 | 7,573 | 34,160 | |
Balance at the end of the period | (2,315,306) | (2,270,105) | (2,315,306) | (2,270,105) |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | $ (30,577) | $ 28,005 | $ 107,019 | $ 51,907 |
Fair Value - Financial Instrume
Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets not carried at fair value: | ||
HTM securities | $ 547,721 | $ 570,638 |
Carrying Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings | 10,662,245 | 10,034,030 |
HTM securities | 541,296 | 570,638 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 10,545,823 | 9,834,108 |
Unsecured senior notes | 1,934,555 | 1,928,622 |
Fair Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings | 10,583,876 | 10,086,372 |
HTM securities | 512,808 | 568,727 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 10,495,587 | 9,826,511 |
Unsecured senior notes | $ 1,917,805 | $ 2,022,283 |
Fair Value - Significant unobse
Fair Value - Significant unobservable inputs (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) | |
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Domestic servicing rights | $ 14,589 | $ 16,917 |
Total Assets | 80,617,639 | 78,042,336 |
Total Liabilities | 75,731,946 | 72,905,322 |
Fair value measurements on recurring basis | Loans held-for-sale | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, fair value option | 1,269,080 | 1,436,194 |
Fair value measurements on recurring basis | RMBS | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities | 170,270 | 189,576 |
Fair value measurements on recurring basis | CMBS | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities | 23,489 | 37,360 |
Fair value measurements on recurring basis | Domestic Servicing Rights | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Domestic servicing rights | 14,589 | 16,917 |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, fair value option | $ 1,269,080 | $ 1,436,194 |
Loans Held-for-sale, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, duration | 1 year 6 months | 1 year 3 months 18 days |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Minimum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, measurement input | 3.3 | 3.4 |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, duration | 10 years 9 months 18 days | 11 years 3 months 18 days |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Maximum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, measurement input | 9.7 | 5.9 |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Weighted-average | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, duration | 4 years 9 months 18 days | |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Weighted-average | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loans held-for-sale, measurement input | 4.7 | |
Fair value measurements on recurring basis | Level III | RMBS | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities | $ 170,270 | $ 189,576 |
Debt Securities, Available-for-sale, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Loss severity for specified percentage of portfolio (as a percent) | 17.00% | 34.00% |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loss severity for specified percentage of portfolio (as a percent) | 45.00% | 45.00% |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Constant prepayment rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 3.2 | 3.1 |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Constant default rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 1.3 | 0.5 |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Loss severity | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 0 | 0 |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Delinquency rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 8 | 5 |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Servicer advances | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 24 | 27 |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Annual coupon deterioration | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 0 | 0 |
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Putback amount per projected total collateral loss | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 0 | 0 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Loss severity for specified percentage of portfolio (as a percent) | 80.00% | 80.00% |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Constant prepayment rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 16.4 | 24.9 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Constant default rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 5 | 5 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Loss severity | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 79 | 93 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Delinquency rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 28 | 29 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Servicer advances | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 85 | 85 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Annual coupon deterioration | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 0.9 | 1.6 |
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Putback amount per projected total collateral loss | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 25 | 28 |
Fair value measurements on recurring basis | Level III | RMBS | Weighted-average | Constant prepayment rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 7.3 | |
Fair value measurements on recurring basis | Level III | RMBS | Weighted-average | Constant default rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 2.6 | |
Fair value measurements on recurring basis | Level III | RMBS | Weighted-average | Loss severity | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 26 | |
Fair value measurements on recurring basis | Level III | RMBS | Weighted-average | Delinquency rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 18 | |
Fair value measurements on recurring basis | Level III | RMBS | Weighted-average | Servicer advances | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 61 | |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | Weighted-average | Annual coupon deterioration | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 0.1 | |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | Weighted-average | Putback amount per projected total collateral loss | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 1.1 | |
Fair value measurements on recurring basis | Level III | CMBS | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities | $ 21,849 | $ 25,008 |
Debt Securities, Available-for-sale, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value measurements on recurring basis | Level III | CMBS | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale debt securities, term | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | CMBS | Minimum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 0 | 0 |
Fair value measurements on recurring basis | Level III | CMBS | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale debt securities, term | 8 years 10 months 24 days | 9 years 8 months 12 days |
Fair value measurements on recurring basis | Level III | CMBS | Maximum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 700.5 | 122.9 |
Fair value measurements on recurring basis | Level III | CMBS | Weighted-average | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 5 years 6 months | |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | Weighted-average | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Available-for-sale securities, measurement input | 6.1 | |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Domestic servicing rights | $ 14,589 | $ 16,917 |
Servicing Asset, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Servicing asset, measurement input | 7.75 | 7.50 |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Discount rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Servicing asset, measurement input | 15 | 15 |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Weighted-average | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Servicing asset, measurement input | 7.75 | |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Weighted-average | Discount rate | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Servicing asset, measurement input | 15 | |
Fair value measurements on recurring basis | Level III | VIE Assets | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | VIE Assets | Minimum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE assets, measurement input | 0 | 0 |
Fair value measurements on recurring basis | Level III | VIE Assets | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 19 years | 19 years 2 months 12 days |
Fair value measurements on recurring basis | Level III | VIE Assets | Maximum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE assets, measurement input | 751.1 | 690.7 |
Fair value measurements on recurring basis | Level III | VIE Assets | Weighted-average | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 3 years 10 months 24 days | |
Fair value measurements on recurring basis | Level III | VIE Assets | Weighted-average | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE assets, measurement input | 13.3 | |
Fair value measurements on recurring basis | Level III | VIE liabilities | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | VIE liabilities | Minimum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE liabilities, measurement input | 0 | 0 |
Fair value measurements on recurring basis | Level III | VIE liabilities | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 11 years | 12 years 8 months 12 days |
Fair value measurements on recurring basis | Level III | VIE liabilities | Maximum | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE liabilities, measurement input | 751.1 | 690.7 |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | Weighted-average | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE duration (in years) | 3 years 9 months 18 days | |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | Weighted-average | Debt yield | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
VIE liabilities, measurement input | 13.3 | |
Primary beneficiary | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Total Assets | $ 64,477,475 | $ 62,187,175 |
Total Liabilities | 62,876,265 | 60,743,494 |
Primary beneficiary | Fair value measurements on recurring basis | VIE Assets | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Total Assets | 64,477,475 | 62,187,175 |
Primary beneficiary | Fair value measurements on recurring basis | VIE liabilities | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Total Liabilities | 62,876,265 | 60,743,494 |
Primary beneficiary | Fair value measurements on recurring basis | Level III | VIE Assets | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Total Assets | $ 64,477,475 | $ 62,187,175 |
Derivative Asset, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Primary beneficiary | Fair value measurements on recurring basis | Level III | VIE liabilities | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Total Liabilities | $ 2,315,306 | $ 2,537,392 |
Derivative Liability, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Income Taxes | ||
Assets | $ 80,617,639 | $ 78,042,336 |
Investing and Servicing Segment | TRS entities | ||
Income Taxes | ||
Assets | $ 1,300,000 | $ 1,600,000 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2017 | |
Reconciliation of statutory tax to effective tax | |||||
Federal statutory tax rate | $ 37,711 | $ 32,448 | $ 54,231 | $ 77,140 | |
REIT and other non-taxable income | (24,688) | 937 | (41,697) | (71,042) | |
State income taxes | 4,278 | (28,870) | 4,118 | 1,597 | |
Federal benefit of state tax deduction | (899) | (196) | (865) | (335) | |
Net operating loss carryback rate differential | (1,569) | (5,286) | |||
Intra-entity transfer | (3,781) | ||||
Other | 10 | 194 | 96 | 1,020 | |
Total income tax provision | $ 14,843 | $ 4,513 | $ 6,816 | $ 8,380 | |
Reconciliation of statutory tax rate to effective tax rate | |||||
Federal statutory tax rate (as a percent) | 21.00% | 21.00% | 21.00% | 21.00% | 35.00% |
REIT and other non-taxable income (as a percent) | (13.70%) | (18.70%) | (16.20%) | (19.30%) | |
State income taxes (as a percent) | 2.40% | 0.60% | 1.60% | 0.40% | |
Federal benefit of state tax deduction (as a percent) | (0.50%) | (0.10%) | (0.30%) | (0.10%) | |
Net operating loss carryback rate differential (as a pecent) | (0.90%) | (2.00%) | |||
Intra-entity transfer | (1.50%) | ||||
Other (as a percent) | 0.10% | 0.30% | |||
Effective tax rate (as a percent) | 8.30% | 2.90% | 2.60% | 2.30% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2020USD ($)item |
Property, Plant and Equipment [Line Items] | |
Number of guarantees | item | 6 |
Infrastructure Lending Segment | |
Property, Plant and Equipment [Line Items] | |
Outstanding | $ 25.6 |
Commitments | Commercial and Residential Lending Segment | |
Property, Plant and Equipment [Line Items] | |
Value of loans with future funding commitments | 1,800 |
Value of loans with future funding commitments expected to fund | 1,600 |
Commitments | Infrastructure Lending Segment | |
Property, Plant and Equipment [Line Items] | |
Value of loans with future funding commitments | 241.6 |
Revolvers and letters of credit | Infrastructure Lending Segment | |
Property, Plant and Equipment [Line Items] | |
Value of loans with future funding commitments | 146.2 |
Delayed draw term loans | Infrastructure Lending Segment | |
Property, Plant and Equipment [Line Items] | |
Value of loans with future funding commitments | $ 95.4 |
Segment Data - Results of Opera
Segment Data - Results of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Interest income from loans | $ 169,404 | $ 172,030 | $ 557,934 | $ 546,912 |
Interest income from investment securities | 12,186 | 16,676 | 42,070 | 56,853 |
Servicing fees | 9,548 | 14,333 | 20,999 | 47,774 |
Rental income | 75,978 | 84,654 | 222,834 | 255,784 |
Other revenues | 311 | 637 | 1,756 | 2,668 |
Total revenues | 267,427 | 288,330 | 845,593 | 909,991 |
Costs and expenses: | ||||
Management fees | 23,127 | 30,238 | 86,970 | 76,227 |
Interest expense | 95,981 | 123,156 | 317,499 | 387,954 |
General and administrative | 39,478 | 39,766 | 110,857 | 112,274 |
Acquisition and investment pursuit costs | 884 | 163 | 3,383 | 579 |
Costs of rental operations | 29,522 | 31,568 | 87,368 | 91,874 |
Depreciation and amortization | 23,581 | 28,269 | 70,982 | 86,075 |
Credit loss provision, net | (3,587) | (39) | 55,284 | 3,242 |
Other expense | 172 | 123 | 662 | 1,777 |
Total costs and expenses | 209,158 | 253,244 | 733,005 | 760,002 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 58,585 | 61,767 | 64,353 | 164,761 |
Change in fair value of servicing rights | 634 | (625) | (2,328) | (2,308) |
Change in fair value of investment securities, net | (199) | 266 | 3,132 | 995 |
Change in fair value of mortgage loans, net | 61,384 | 32,521 | 79,700 | 65,678 |
Earnings (loss) from unconsolidated entities | 3,192 | 2,747 | 32,065 | (31,636) |
Gain (loss) on sale of investments and other assets, net | 21,157 | 6,768 | 28,157 | |
(Loss) gain on derivative financial instruments, net | (28,097) | 21,933 | (34,485) | 19,694 |
Foreign currency (loss) gain, net | 25,452 | (15,664) | (1,861) | (17,134) |
Loss on extinguishment of debt | (4,624) | (2,377) | (10,738) | |
Other income (loss), net | 357 | (50) | 687 | (123) |
Total other income | 121,308 | 119,428 | 145,654 | 217,346 |
Income before income taxes | 179,577 | 154,514 | 258,242 | 367,335 |
Income tax (provision) benefit | (14,843) | (4,513) | (6,816) | (8,380) |
Net income | 164,734 | 150,001 | 251,426 | 358,955 |
Net income attributable to Starwood Property Trust, Inc. | (12,900) | (9,605) | (26,705) | (21,160) |
Net income attributable to Starwood Property Trust, Inc. | 151,834 | 140,396 | 224,721 | 337,795 |
Operating Segments and Corporate | ||||
Revenues: | ||||
Interest income from loans | 169,404 | 172,030 | 557,934 | 546,912 |
Interest income from investment securities | 45,607 | 51,529 | 132,688 | 153,013 |
Servicing fees | 13,859 | 18,340 | 29,206 | 61,676 |
Rental income | 75,978 | 84,654 | 222,834 | 255,784 |
Other revenues | 313 | 640 | 1,761 | 2,692 |
Total revenues | 305,161 | 327,193 | 944,423 | 1,020,077 |
Costs and expenses: | ||||
Management fees | 23,114 | 30,210 | 86,924 | 76,105 |
Interest expense | 95,981 | 123,319 | 317,661 | 388,441 |
General and administrative | 39,394 | 39,688 | 110,606 | 112,016 |
Acquisition and investment pursuit costs | 884 | 163 | 3,383 | 579 |
Costs of rental operations | 29,522 | 31,568 | 87,368 | 91,874 |
Depreciation and amortization | 23,581 | 28,269 | 70,982 | 86,075 |
Credit loss provision, net | (3,587) | (39) | 55,284 | 3,242 |
Other expense | 172 | 123 | 662 | 1,777 |
Total costs and expenses | 209,061 | 253,301 | 732,870 | 760,109 |
Other income (loss): | ||||
Change in fair value of servicing rights | 3,960 | 57 | 9,606 | (1,617) |
Change in fair value of investment securities, net | 16,860 | 22,173 | (44,840) | 53,486 |
Change in fair value of mortgage loans, net | 61,384 | 32,521 | 79,700 | 65,678 |
Earnings (loss) from unconsolidated entities | 3,531 | 2,983 | 33,281 | (30,361) |
Gain (loss) on sale of investments and other assets, net | 21,157 | 6,768 | 28,157 | |
(Loss) gain on derivative financial instruments, net | (28,097) | 21,933 | (34,485) | 19,694 |
Foreign currency (loss) gain, net | 25,452 | (15,664) | (1,861) | (17,134) |
Loss on extinguishment of debt | (4,624) | (2,377) | (10,738) | |
Other income (loss), net | 357 | (50) | 687 | (123) |
Total other income | 83,447 | 80,486 | 46,479 | 107,042 |
Income before income taxes | 179,547 | 154,378 | 258,032 | 367,010 |
Income tax (provision) benefit | (14,843) | (4,513) | (6,816) | (8,380) |
Net income | 164,704 | 149,865 | 251,216 | 358,630 |
Net income attributable to Starwood Property Trust, Inc. | (12,870) | (9,469) | (26,495) | (20,835) |
Net income attributable to Starwood Property Trust, Inc. | 151,834 | 140,396 | 224,721 | 337,795 |
Operating segment | Commercial and Residential Lending Segment | ||||
Revenues: | ||||
Interest income from loans | 149,972 | 145,290 | 492,489 | 462,956 |
Interest income from investment securities | 21,385 | 18,163 | 57,358 | 62,438 |
Servicing fees | 110 | 97 | 424 | 310 |
Rental income | 2,014 | 2,782 | ||
Other revenues | 66 | 258 | 298 | 714 |
Total revenues | 173,547 | 163,808 | 553,351 | 526,418 |
Costs and expenses: | ||||
Management fees | 297 | 363 | 987 | 1,127 |
Interest expense | 38,422 | 51,844 | 134,243 | 172,012 |
General and administrative | 12,483 | 7,104 | 29,230 | 20,626 |
Acquisition and investment pursuit costs | 757 | 506 | 2,195 | 915 |
Costs of rental operations | 643 | 765 | 2,409 | 1,525 |
Depreciation and amortization | 430 | 339 | 1,275 | 695 |
Credit loss provision, net | 782 | (39) | 52,293 | 2,046 |
Other expense | 77 | 77 | 230 | 230 |
Total costs and expenses | 53,891 | 60,959 | 222,862 | 199,176 |
Other income (loss): | ||||
Change in fair value of investment securities, net | 13,611 | (303) | (8,814) | (2,945) |
Change in fair value of mortgage loans, net | 59,402 | 10,088 | 56,895 | 16,837 |
Earnings (loss) from unconsolidated entities | 3,253 | 2,507 | 3,975 | 8,576 |
Gain (loss) on sale of investments and other assets, net | 482 | (961) | 3,476 | |
(Loss) gain on derivative financial instruments, net | (28,577) | 15,729 | (9,508) | 12,024 |
Foreign currency (loss) gain, net | 25,302 | (15,337) | (1,757) | (17,025) |
Loss on extinguishment of debt | (857) | (22) | (857) | |
Total other income | 72,991 | 12,309 | 39,808 | 20,086 |
Income before income taxes | 192,647 | 115,158 | 370,297 | 347,328 |
Income tax (provision) benefit | (16,700) | (3,194) | (15,535) | (4,778) |
Net income | 175,947 | 111,964 | 354,762 | 342,550 |
Net income attributable to Starwood Property Trust, Inc. | (3) | (10) | (392) | |
Net income attributable to Starwood Property Trust, Inc. | 175,944 | 111,964 | 354,752 | 342,158 |
Operating segment | Infrastructure Lending Segment | ||||
Revenues: | ||||
Interest income from loans | 17,835 | 22,763 | 59,374 | 74,969 |
Interest income from investment securities | 635 | 810 | 2,019 | 2,563 |
Other revenues | 101 | 39 | 344 | 732 |
Total revenues | 18,571 | 23,612 | 61,737 | 78,264 |
Costs and expenses: | ||||
Interest expense | 8,914 | 14,422 | 31,709 | 49,257 |
General and administrative | 3,568 | 4,315 | 12,328 | 13,624 |
Acquisition and investment pursuit costs | 62 | 21 | 1,179 | 51 |
Depreciation and amortization | 87 | 15 | 246 | 15 |
Credit loss provision, net | (4,369) | 2,991 | 1,196 | |
Total costs and expenses | 8,262 | 18,773 | 48,453 | 64,143 |
Other income (loss): | ||||
Earnings (loss) from unconsolidated entities | (80) | (1,198) | ||
Gain (loss) on sale of investments and other assets, net | (25) | 296 | 3,041 | |
(Loss) gain on derivative financial instruments, net | 110 | (109) | (1,328) | (3,337) |
Foreign currency (loss) gain, net | 110 | (319) | (53) | (102) |
Loss on extinguishment of debt | (2,101) | (170) | (8,221) | |
Other income (loss), net | (50) | (50) | ||
Total other income | 140 | (2,604) | (2,453) | (8,669) |
Income before income taxes | 10,449 | 2,235 | 10,831 | 5,452 |
Income tax (provision) benefit | (86) | 475 | 3 | 746 |
Net income | 10,363 | 2,710 | 10,834 | 6,198 |
Net income attributable to Starwood Property Trust, Inc. | 10,363 | 2,710 | 10,834 | 6,198 |
Operating segment | Investing and Servicing Segment | ||||
Revenues: | ||||
Interest income from loans | 1,597 | 3,977 | 6,071 | 8,987 |
Interest income from investment securities | 23,587 | 32,556 | 73,311 | 88,012 |
Servicing fees | 13,749 | 18,243 | 28,782 | 61,366 |
Rental income | 10,039 | 12,403 | 28,600 | 40,686 |
Other revenues | 98 | 218 | 891 | 929 |
Total revenues | 49,070 | 67,397 | 137,655 | 199,980 |
Costs and expenses: | ||||
Management fees | 221 | 18 | 680 | 54 |
Interest expense | 5,425 | 8,891 | 18,796 | 25,152 |
General and administrative | 18,813 | 22,915 | 54,490 | 61,943 |
Acquisition and investment pursuit costs | 65 | (364) | (3) | (387) |
Costs of rental operations | 4,577 | 6,019 | 13,102 | 19,503 |
Depreciation and amortization | 3,934 | 4,809 | 11,890 | 15,287 |
Other expense | 194 | |||
Total costs and expenses | 33,035 | 42,288 | 98,955 | 121,746 |
Other income (loss): | ||||
Change in fair value of servicing rights | 3,960 | 57 | 9,606 | (1,617) |
Change in fair value of investment securities, net | 3,249 | 22,476 | (36,026) | 56,431 |
Change in fair value of mortgage loans, net | 1,982 | 22,433 | 22,805 | 48,841 |
Earnings (loss) from unconsolidated entities | 358 | 253 | 30,504 | 3,601 |
Gain (loss) on sale of investments and other assets, net | 20,700 | 7,433 | 21,640 | |
(Loss) gain on derivative financial instruments, net | 38 | (6,376) | (22,896) | (16,761) |
Foreign currency (loss) gain, net | 26 | 2 | ||
Loss on extinguishment of debt | (194) | (194) | ||
Other income (loss), net | 358 | 447 | ||
Total other income | 9,971 | 59,349 | 11,875 | 111,941 |
Income before income taxes | 26,006 | 84,458 | 50,575 | 190,175 |
Income tax (provision) benefit | 1,943 | (1,794) | 8,716 | (4,090) |
Net income | 27,949 | 82,664 | 59,291 | 186,085 |
Net income attributable to Starwood Property Trust, Inc. | (7,795) | (4,219) | (11,191) | (4,121) |
Net income attributable to Starwood Property Trust, Inc. | 20,154 | 78,445 | 48,100 | 181,964 |
Operating segment | Property Segment | ||||
Revenues: | ||||
Rental income | 63,925 | 72,251 | 191,452 | 215,098 |
Other revenues | 48 | 125 | 228 | 291 |
Total revenues | 63,973 | 72,376 | 191,680 | 215,389 |
Costs and expenses: | ||||
Interest expense | 16,180 | 19,020 | 49,243 | 57,142 |
General and administrative | 1,094 | 2,170 | 3,453 | 5,394 |
Acquisition and investment pursuit costs | 12 | |||
Costs of rental operations | 24,302 | 24,784 | 71,857 | 70,846 |
Depreciation and amortization | 19,130 | 23,106 | 57,571 | 70,078 |
Other expense | 95 | 46 | 432 | 1,353 |
Total costs and expenses | 60,801 | 69,126 | 182,568 | 204,813 |
Other income (loss): | ||||
Earnings (loss) from unconsolidated entities | 223 | (42,538) | ||
(Loss) gain on derivative financial instruments, net | (313) | 5,900 | (35,150) | (3,957) |
Foreign currency (loss) gain, net | 14 | (8) | (53) | (7) |
Loss on extinguishment of debt | (2,185) | |||
Other income (loss), net | (1) | 240 | ||
Total other income | (300) | 6,115 | (37,148) | (46,502) |
Income before income taxes | 2,872 | 9,365 | (28,036) | (35,926) |
Income tax (provision) benefit | (258) | |||
Net income | 2,872 | 9,365 | (28,036) | (36,184) |
Net income attributable to Starwood Property Trust, Inc. | (5,072) | (5,250) | (15,294) | (16,322) |
Net income attributable to Starwood Property Trust, Inc. | (2,200) | 4,115 | (43,330) | (52,506) |
Corporate | ||||
Revenues: | ||||
Other revenues | 26 | |||
Total revenues | 26 | |||
Costs and expenses: | ||||
Management fees | 22,596 | 29,829 | 85,257 | 74,924 |
Interest expense | 27,040 | 29,142 | 83,670 | 84,878 |
General and administrative | 3,436 | 3,184 | 11,105 | 10,429 |
Total costs and expenses | 53,072 | 62,155 | 180,032 | 170,231 |
Other income (loss): | ||||
(Loss) gain on derivative financial instruments, net | 645 | 6,789 | 34,397 | 31,725 |
Loss on extinguishment of debt | (1,472) | (1,466) | ||
Other income (loss), net | (73) | |||
Total other income | 645 | 5,317 | 34,397 | 30,186 |
Income before income taxes | (52,427) | (56,838) | (145,635) | (140,019) |
Net income | (52,427) | (56,838) | (145,635) | (140,019) |
Net income attributable to Starwood Property Trust, Inc. | (52,427) | (56,838) | (145,635) | (140,019) |
LNR VIEs | ||||
Revenues: | ||||
Interest income from investment securities | (33,421) | (34,853) | (90,618) | (96,160) |
Servicing fees | (4,311) | (4,007) | (8,207) | (13,902) |
Other revenues | (2) | (3) | (5) | (24) |
Total revenues | (37,734) | (38,863) | (98,830) | (110,086) |
Costs and expenses: | ||||
Management fees | 13 | 28 | 46 | 122 |
Interest expense | (163) | (162) | (487) | |
General and administrative | 84 | 78 | 251 | 258 |
Total costs and expenses | 97 | (57) | 135 | (107) |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 58,585 | 61,767 | 64,353 | 164,761 |
Change in fair value of servicing rights | (3,326) | (682) | (11,934) | (691) |
Change in fair value of investment securities, net | (17,059) | (21,907) | 47,972 | (52,491) |
Earnings (loss) from unconsolidated entities | (339) | (236) | (1,216) | (1,275) |
Total other income | 37,861 | 38,942 | 99,175 | 110,304 |
Income before income taxes | 30 | 136 | 210 | 325 |
Net income | 30 | 136 | 210 | 325 |
Net income attributable to Starwood Property Trust, Inc. | $ (30) | $ (136) | $ (210) | $ (325) |
Segment Data - Balance sheets (
Segment Data - Balance sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Assets: | ||||||
Cash and cash equivalents | $ 379,870 | $ 478,388 | ||||
Restricted cash | 131,336 | 95,643 | ||||
Loans held-for-investment, net of credit loss allowances of $109,747 and $33,415 ($256,407 and $671,572 held at fair value) | 10,918,652 | 10,586,074 | ||||
Loans held-for-sale | 1,012,673 | 884,150 | ||||
Investment securities | 745,113 | 810,238 | ||||
Properties, net | 2,207,822 | 2,266,440 | ||||
Intangible assets | 74,139 | 85,700 | ||||
Investment in unconsolidated entities | 104,384 | 84,329 | ||||
Goodwill | 259,846 | 259,846 | ||||
Derivative assets | 64,825 | 28,943 | ||||
Accrued interest receivable | 78,030 | 64,087 | ||||
Other assets | 163,474 | 211,323 | ||||
Total Assets | 80,617,639 | 78,042,336 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 201,491 | 212,006 | ||||
Related-party payable | 22,096 | 40,925 | ||||
Dividends payable | 138,264 | 137,427 | ||||
Derivative liabilities | 13,452 | 8,740 | ||||
Secured financing agreements, net | 9,615,892 | 8,906,048 | ||||
Collateralized loan obligations, net | 929,931 | 928,060 | ||||
Unsecured senior notes, net | 1,934,555 | 1,928,622 | ||||
Total Liabilities | 75,731,946 | 72,905,322 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,918 | 2,874 | ||||
Additional paid-in capital | 5,200,716 | 5,132,532 | ||||
Treasury stock | (133,024) | (104,194) | ||||
Accumulated other comprehensive income (loss) | 42,285 | $ 42,866 | 50,932 | $ 52,377 | $ 57,124 | $ 58,660 |
Retained earnings (accumulated deficit) | (599,014) | (381,719) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,513,881 | 4,700,425 | ||||
Non-controlling interests in consolidated subsidiaries | 371,812 | 436,589 | ||||
Total Equity | 4,885,693 | $ 4,864,796 | 5,137,014 | $ 4,913,014 | $ 4,903,251 | $ 4,900,189 |
Total Liabilities and Equity | 80,617,639 | 78,042,336 | ||||
Infrastructure Lending Segment | ||||||
Assets: | ||||||
Goodwill | 119,400 | 119,400 | ||||
Investing and Servicing Segment | ||||||
Assets: | ||||||
Goodwill | 140,400 | 140,400 | ||||
Operating Segments and Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 379,122 | 477,167 | ||||
Restricted cash | 131,336 | 95,643 | ||||
Loans held-for-investment, net of credit loss allowances of $109,747 and $33,415 ($256,407 and $671,572 held at fair value) | 10,918,652 | 10,586,074 | ||||
Loans held-for-sale | 1,012,673 | 884,150 | ||||
Investment securities | 2,289,497 | 2,215,275 | ||||
Properties, net | 2,207,822 | 2,266,440 | ||||
Intangible assets | 112,320 | 111,947 | ||||
Investment in unconsolidated entities | 120,750 | 104,966 | ||||
Goodwill | 259,846 | 259,846 | ||||
Derivative assets | 64,825 | 28,943 | ||||
Accrued interest receivable | 79,406 | 64,893 | ||||
Other assets | 163,471 | 211,330 | ||||
Total Assets | 17,739,720 | 17,306,674 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 201,433 | 211,922 | ||||
Related-party payable | 22,096 | 40,925 | ||||
Dividends payable | 138,264 | 137,427 | ||||
Derivative liabilities | 13,452 | 8,740 | ||||
Secured financing agreements, net | 9,615,892 | 8,919,998 | ||||
Collateralized loan obligations, net | 929,931 | 928,060 | ||||
Unsecured senior notes, net | 1,934,555 | 1,928,622 | ||||
Total Liabilities | 12,855,623 | 12,175,694 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,918 | 2,874 | ||||
Additional paid-in capital | 5,200,716 | 5,132,532 | ||||
Treasury stock | (133,024) | (104,194) | ||||
Accumulated other comprehensive income (loss) | 42,285 | 50,932 | ||||
Retained earnings (accumulated deficit) | (599,014) | (381,719) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,513,881 | 4,700,425 | ||||
Non-controlling interests in consolidated subsidiaries | 370,216 | 430,555 | ||||
Total Equity | 4,884,097 | 5,130,980 | ||||
Total Liabilities and Equity | 17,739,720 | 17,306,674 | ||||
Operating segment | Commercial and Residential Lending Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 19,111 | 26,278 | ||||
Restricted cash | 69,351 | 36,135 | ||||
Loans held-for-investment, net of credit loss allowances of $109,747 and $33,415 ($256,407 and $671,572 held at fair value) | 9,373,503 | 9,187,332 | ||||
Loans held-for-sale | 747,654 | 605,384 | ||||
Investment securities | 1,152,362 | 992,974 | ||||
Properties, net | 27,123 | 26,834 | ||||
Investment in unconsolidated entities | 50,850 | 46,921 | ||||
Derivative assets | 25,805 | 14,718 | ||||
Accrued interest receivable | 72,344 | 45,996 | ||||
Other assets | 24,705 | 59,170 | ||||
Total Assets | 11,562,808 | 11,041,742 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 36,378 | 30,594 | ||||
Derivative liabilities | 8,839 | 7,698 | ||||
Secured financing agreements, net | 5,576,092 | 5,038,876 | ||||
Collateralized loan obligations, net | 929,931 | 928,060 | ||||
Total Liabilities | 6,551,240 | 6,005,228 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 1,165,764 | 1,522,360 | ||||
Accumulated other comprehensive income (loss) | 42,350 | 50,996 | ||||
Retained earnings (accumulated deficit) | 3,803,336 | 3,463,158 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 5,011,450 | 5,036,514 | ||||
Non-controlling interests in consolidated subsidiaries | 118 | |||||
Total Equity | 5,011,568 | 5,036,514 | ||||
Total Liabilities and Equity | 11,562,808 | 11,041,742 | ||||
Operating segment | Infrastructure Lending Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 994 | 2,209 | ||||
Restricted cash | 31,515 | 41,967 | ||||
Loans held-for-investment, net of credit loss allowances of $109,747 and $33,415 ($256,407 and $671,572 held at fair value) | 1,544,068 | 1,397,448 | ||||
Loans held-for-sale | 119,528 | |||||
Investment securities | 39,813 | 45,153 | ||||
Investment in unconsolidated entities | 24,664 | 25,862 | ||||
Goodwill | 119,409 | 119,409 | ||||
Derivative assets | 7 | |||||
Accrued interest receivable | 3,244 | 3,134 | ||||
Other assets | 4,216 | 6,101 | ||||
Total Assets | 1,767,923 | 1,760,818 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 8,545 | 6,443 | ||||
Derivative liabilities | 1,516 | 750 | ||||
Secured financing agreements, net | 1,243,001 | 1,217,066 | ||||
Total Liabilities | 1,253,062 | 1,224,259 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 509,848 | 529,668 | ||||
Retained earnings (accumulated deficit) | 5,013 | 6,891 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 514,861 | 536,559 | ||||
Total Equity | 514,861 | 536,559 | ||||
Total Liabilities and Equity | 1,767,923 | 1,760,818 | ||||
Operating segment | Property Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 38,119 | 30,123 | ||||
Restricted cash | 7,632 | 7,171 | ||||
Properties, net | 1,983,124 | 2,029,024 | ||||
Intangible assets | 41,946 | 47,303 | ||||
Derivative assets | 54 | 3 | ||||
Accrued interest receivable | 133 | |||||
Other assets | 70,369 | 82,910 | ||||
Total Assets | 2,141,244 | 2,196,667 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 49,758 | 48,370 | ||||
Secured financing agreements, net | 1,793,731 | 1,698,334 | ||||
Total Liabilities | 1,843,489 | 1,746,704 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 115,246 | 208,650 | ||||
Retained earnings (accumulated deficit) | (42,898) | 5,431 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 72,348 | 214,081 | ||||
Non-controlling interests in consolidated subsidiaries | 225,407 | 235,882 | ||||
Total Equity | 297,755 | 449,963 | ||||
Total Liabilities and Equity | 2,141,244 | 2,196,667 | ||||
Operating segment | Investing and Servicing Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 22,054 | 61,693 | ||||
Restricted cash | 22,838 | 10,370 | ||||
Loans held-for-investment, net of credit loss allowances of $109,747 and $33,415 ($256,407 and $671,572 held at fair value) | 1,081 | 1,294 | ||||
Loans held-for-sale | 265,019 | 159,238 | ||||
Investment securities | 1,097,322 | 1,177,148 | ||||
Properties, net | 197,575 | 210,582 | ||||
Intangible assets | 70,374 | 64,644 | ||||
Investment in unconsolidated entities | 45,236 | 32,183 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 1,250 | 7 | ||||
Accrued interest receivable | 334 | 2,388 | ||||
Other assets | 52,352 | 54,238 | ||||
Total Assets | 1,915,872 | 1,914,222 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 35,796 | 73,021 | ||||
Related-party payable | 5 | 5 | ||||
Derivative liabilities | 3,097 | 292 | ||||
Secured financing agreements, net | 614,055 | 574,507 | ||||
Total Liabilities | 652,953 | 647,825 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | (124,805) | (123,210) | ||||
Accumulated other comprehensive income (loss) | (65) | (64) | ||||
Retained earnings (accumulated deficit) | 1,243,098 | 1,194,998 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 1,118,228 | 1,071,724 | ||||
Non-controlling interests in consolidated subsidiaries | 144,691 | 194,673 | ||||
Total Equity | 1,262,919 | 1,266,397 | ||||
Total Liabilities and Equity | 1,915,872 | 1,914,222 | ||||
Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 298,844 | 356,864 | ||||
Derivative assets | 37,716 | 14,208 | ||||
Accrued interest receivable | 3,484 | 13,242 | ||||
Other assets | 11,829 | 8,911 | ||||
Total Assets | 351,873 | 393,225 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 70,956 | 53,494 | ||||
Related-party payable | 22,091 | 40,920 | ||||
Dividends payable | 138,264 | 137,427 | ||||
Secured financing agreements, net | 389,013 | 391,215 | ||||
Unsecured senior notes, net | 1,934,555 | 1,928,622 | ||||
Total Liabilities | 2,554,879 | 2,551,678 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,918 | 2,874 | ||||
Additional paid-in capital | 3,534,663 | 2,995,064 | ||||
Treasury stock | (133,024) | (104,194) | ||||
Retained earnings (accumulated deficit) | (5,607,563) | (5,052,197) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | (2,203,006) | (2,158,453) | ||||
Total Equity | (2,203,006) | (2,158,453) | ||||
Total Liabilities and Equity | 351,873 | 393,225 | ||||
LNR VIEs | ||||||
Assets: | ||||||
Cash and cash equivalents | 748 | 1,221 | ||||
Investment securities | (1,544,384) | (1,405,037) | ||||
Intangible assets | (38,181) | (26,247) | ||||
Investment in unconsolidated entities | (16,366) | (20,637) | ||||
Accrued interest receivable | (1,376) | (806) | ||||
Other assets | 3 | (7) | ||||
Total Assets | 62,877,919 | 60,735,662 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 58 | 84 | ||||
Secured financing agreements, net | (13,950) | |||||
Total Liabilities | 62,876,323 | 60,729,628 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Non-controlling interests in consolidated subsidiaries | 1,596 | 6,034 | ||||
Total Equity | 1,596 | 6,034 | ||||
Total Liabilities and Equity | 62,877,919 | 60,735,662 | ||||
Primary beneficiary | ||||||
Assets: | ||||||
Total Assets | 64,477,475 | 62,187,175 | ||||
Liabilities: | ||||||
Total Liabilities | 62,876,265 | 60,743,494 | ||||
Primary beneficiary | LNR VIEs | ||||||
Assets: | ||||||
Total Assets | 64,477,475 | 62,187,175 | ||||
Liabilities: | ||||||
Total Liabilities | $ 62,876,265 | $ 60,743,494 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Nov. 02, 2020 | Oct. 31, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Nov. 30, 2020 |
Secured Borrowings | |||||
Subsequent Events | |||||
Increase in available borrowings | $ 250,000 | ||||
Maximum Facility Size | $ 17,797,273 | ||||
2021 Senior Notes 3.63% | |||||
Subsequent Events | |||||
Interest rate (as a percent) | 3.63% | ||||
2021 Senior Notes 3.63% | LIBOR | |||||
Subsequent Events | |||||
Pricing margin (as a percent) | 1.28% | ||||
Term loan facility | |||||
Subsequent Events | |||||
Maximum borrowing capacity | $ 396,000 | ||||
Term loan facility | LIBOR | |||||
Subsequent Events | |||||
Pricing margin (as a percent) | 2.50% | ||||
Subsequent event | Commercial Portfolio Segment | Mortgage Loans | |||||
Subsequent Events | |||||
Proceeds from securitization | $ 253,000 | ||||
Securitization amount | 231,800 | ||||
Subsequent event | Senior notes 5.50 | |||||
Subsequent Events | |||||
Amount issued | $ 300,000 | ||||
Interest rate (as a percent) | 5.50% | ||||
Subsequent event | 2021 Senior Notes 3.63% | |||||
Subsequent Events | |||||
Amount of notes with conditional notices of redemption issued | 500,000 | ||||
Amount of debt redeemed | $ 250,000 | ||||
Amount of debt subject to redemption | $ 250,000 | ||||
Amount issued | 500,000 | ||||
Subsequent event | Term loan facility | Secured Borrowings | |||||
Subsequent Events | |||||
Increase in available borrowings | 250,000 | ||||
Maximum borrowing capacity | $ 646,000 | ||||
Maturity period | 6 years | ||||
Subsequent event | Term loan facility | Secured Borrowings | LIBOR | |||||
Subsequent Events | |||||
Pricing margin (as a percent) | 3.50% | ||||
Subsequent event | Residential Repurchase Facility | Secured Borrowings | |||||
Subsequent Events | |||||
Maximum borrowing capacity | $ 350,000 | ||||
Maturity period | 18 months | ||||
Subsequent event | Residential Repurchase Facility | Secured Borrowings | One-month LIBOR | |||||
Subsequent Events | |||||
Interest rate (as a percent) | 2.30% |