Starwood Property Trust Roars Ahead with Record-Breaking Investments and Strong Lending Performance
Starwood Property Trust, a leading real estate investment trust (REIT), has reported a strong start to the year with record-breaking investments and robust lending performance in its first quarter 2025 earnings conference call.
The company committed $2.3 billion towards new investments, its highest quarterly level in nearly three years, with infrastructure lending committing its highest single-quarter capital since acquiring the business from GE in 2018. This significant investment pace continued after the quarter end, with $1.3 billion already closed.
Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Property Trust, noted that the company's strong investing pace is a testament to its commitment to delivering long-term value for shareholders. "We are proud of our team's ability to execute on our investment strategy, which has enabled us to maintain a high level of activity despite market headwinds," he said.
Rina Paniry, Chief Financial Officer, highlighted the company's Commercial and Residential Lending segment, which contributed $179 million in distributable earnings (DE) or $0.51 per share to the quarter. The loan book grew by $859 million, driven by $1.4 billion of loans originated, with $886 million funded and an additional $250 million of pre-existing loan commitments.
Residential lending also showed strong performance, with the on-balance sheet loan portfolio ending the quarter at $2.4 billion and repayments totaling $55 million. The retained RMBS portfolio remained relatively flat at $422 million, offset by positive mark-to-market movements.
In the Property segment, Starwood Property Trust recognized $16 million of DE or $0.05 per share in the quarter, driven by its Florida affordable multifamily portfolio. Notably, HUD released new maximum rent levels subsequent to the quarter end, providing a boost to the company's affordable housing initiatives.
The company also made significant progress in resolving non-performing assets, with $230 million resolved across three assets this year at pricing at or above GAAP basis. This included the full repayment of a $38 million loan secured by a hospitality asset in California and the sale of an apartment building in Texas for a $5 million premium to its GAAP basis.
The company's CECL reserve decreased by $26 million in the quarter, reflecting a more optimistic macroeconomic forecast. This reduction, combined with previously taken REO impairments, represents 4.2% of the company's lending and REO portfolios and translates to $1.93 per share of book value.
Overall, Starwood Property Trust's strong performance in the first quarter is a testament to its ability to navigate market challenges and deliver long-term value for shareholders.
