UNITED STATES
For the quarterly period endedSeptember 30, 2021 Commission file number001-34436☒☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 2020☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Starwood Property Trust, Inc.
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Maryland |
| 27-0247747 | ||||||
(State or Other Jurisdiction of |
| (I.R.S. Employer | ||||||
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591 West Putnam Avenue |
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| 06830 | ||||||
(Address of Principal Executive Offices) |
| (Zip Code) |
(203) 422-7700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.01 par value per share | STWD | New York Stock Exchange |
☒No☐
☒No☐
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Large accelerated filer |
| Accelerated filer | |||||||||
Non-accelerated filer |
| Smaller reporting company | ☐ | ||||||||
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| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻☐
☒
288,596,238.
Special Note Regarding Forward-Looking Statements
2
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availability of mortgage origination and acquisition opportunities acceptable to us;
3
TABLE OF CONTENTS
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4
| | | | | | |
| | As of | | As of | ||
| | September 30, 2020 | | December 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 ($203,817 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 |
Variable interest entity (“VIE”) assets, at fair value | |
| 64,477,475 | |
| 62,187,175 |
Total Assets | | $ | 80,617,639 | | $ | 78,042,336 |
Liabilities and Equity | | | | | | |
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 |
VIE liabilities, at fair value | |
| 62,876,265 | |
| 60,743,494 |
Total Liabilities | |
| 75,731,946 | |
| 72,905,322 |
Commitments and contingencies (Note 21) | | | | | | |
Equity: | | | | | | |
Starwood Property Trust, Inc. Stockholders’ Equity: | | | | | | |
Preferred stock, $0.01 per share, 100,000,000 shares authorized, 0 shares issued and outstanding | |
| — | |
| — |
Common stock, $0.01 per share, 500,000,000 shares authorized, 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 |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 273,316 | $ | 563,217 | |||||||
Restricted cash | 110,472 | 158,945 | |||||||||
Loans held-for-investment, net of credit loss allowances of $57,573 and $77,444 ($91,499 and $90,684 held at fair value) | 13,292,998 | 11,087,073 | |||||||||
Loans held-for-sale ($2,099,266 and $932,295 held at fair value) | 2,183,519 | 1,052,835 | |||||||||
Investment securities, net of credit loss allowances of $6,389 and $5,675 ($184,153 and $198,053 held at fair value) | 670,887 | 736,658 | |||||||||
Properties, net | 2,228,862 | 2,271,153 | |||||||||
Intangible assets ($15,942 and $13,202 held at fair value) | 65,122 | 70,117 | |||||||||
Investment in unconsolidated entities | 94,000 | 108,054 | |||||||||
Goodwill | 259,846 | 259,846 | |||||||||
Derivative assets | 52,566 | 40,555 | |||||||||
Accrued interest receivable | 108,126 | 95,980 | |||||||||
Other assets | 294,670 | 190,748 | |||||||||
Variable interest entity (“VIE”) assets, at fair value | 62,346,480 | 64,238,328 | |||||||||
Total Assets | $ | 81,980,864 | $ | 80,873,509 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 210,080 | $ | 206,845 | |||||||
Related-party payable | 23,378 | 39,170 | |||||||||
Dividends payable | 139,738 | 137,959 | |||||||||
Derivative liabilities | 15,615 | 41,324 | |||||||||
Secured financing agreements, net | 11,502,052 | 10,146,190 | |||||||||
Collateralized loan obligations and single asset securitization, net | 2,614,230 | 930,554 | |||||||||
Unsecured senior notes, net | 1,733,684 | 1,732,520 | |||||||||
VIE liabilities, at fair value | 60,894,975 | 62,776,371 | |||||||||
Total Liabilities | 77,133,752 | 76,010,933 | |||||||||
Commitments and contingencies (Note 21) | 0 | 0 | |||||||||
Equity: | |||||||||||
Starwood Property Trust, Inc. Stockholders’ Equity: | |||||||||||
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Common stock, $0.01 per share, 500,000,000 shares authorized, 296,072,090 issued and 288,623,399 outstanding as of September 30, 2021 and 292,091,601 issued and 284,642,910 outstanding as of December 31, 2020 | 2,961 | 2,921 | |||||||||
Additional paid-in capital | 5,270,265 | 5,209,739 | |||||||||
Treasury stock (7,448,691 shares) | (138,022) | (138,022) | |||||||||
Accumulated other comprehensive income | 40,486 | 43,993 | |||||||||
Accumulated deficit | (687,980) | (629,733) | |||||||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,487,710 | 4,488,898 | |||||||||
Non-controlling interests in consolidated subsidiaries | 359,402 | 373,678 | |||||||||
Total Equity | 4,847,112 | 4,862,576 | |||||||||
Total Liabilities and Equity | $ | 81,980,864 | $ | 80,873,509 |
5
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2020 |
| 2019 |
| 2020 |
| 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 (reversal) 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 | | $ | 0.53 | | $ | 0.50 | | $ | 0.79 | | $ | 1.20 |
Diluted | | $ | 0.52 | | $ | 0.49 | | $ | 0.79 | | $ | 1.19 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Interest income from loans | $ | 203,252 | $ | 169,404 | $ | 583,099 | $ | 557,934 | |||||||||||||||
Interest income from investment securities | 10,697 | 12,186 | 32,955 | 42,070 | |||||||||||||||||||
Servicing fees | 10,473 | 9,548 | 29,739 | 20,999 | |||||||||||||||||||
Rental income | 77,512 | 75,978 | 230,969 | 222,834 | |||||||||||||||||||
Other revenues | 352 | 311 | 3,621 | 1,756 | |||||||||||||||||||
Total revenues | 302,286 | 267,427 | 880,383 | 845,593 | |||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Management fees | 23,727 | 23,127 | 91,713 | 86,970 | |||||||||||||||||||
Interest expense | 115,531 | 95,981 | 328,558 | 317,499 | |||||||||||||||||||
General and administrative | 38,864 | 39,478 | 122,765 | 110,857 | |||||||||||||||||||
Acquisition and investment pursuit costs | 214 | 884 | 806 | 3,383 | |||||||||||||||||||
Costs of rental operations | 31,516 | 29,522 | 90,992 | 87,368 | |||||||||||||||||||
Depreciation and amortization | 22,041 | 23,581 | 66,992 | 70,982 | |||||||||||||||||||
Credit loss (reversal) provision, net | (563) | (3,587) | (12,363) | 55,284 | |||||||||||||||||||
Other expense | 23 | 172 | 708 | 662 | |||||||||||||||||||
Total costs and expenses | 231,353 | 209,158 | 690,171 | 733,005 | |||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||
Change in net assets related to consolidated VIEs | 28,049 | 58,585 | 80,303 | 64,353 | |||||||||||||||||||
Change in fair value of servicing rights | 2,237 | 634 | 2,740 | (2,328) | |||||||||||||||||||
Change in fair value of investment securities, net | (299) | (199) | 903 | 3,132 | |||||||||||||||||||
Change in fair value of mortgage loans, net | 31,727 | 61,384 | 68,116 | 79,700 | |||||||||||||||||||
Earnings from unconsolidated entities | 2,042 | 3,192 | 6,002 | 32,065 | |||||||||||||||||||
(Loss) gain on sale of investments and other assets, net | (47) | — | 26,377 | 6,768 | |||||||||||||||||||
Gain (loss) on derivative financial instruments, net | 41,812 | (28,097) | 65,792 | (34,485) | |||||||||||||||||||
Foreign currency (loss) gain, net | (27,003) | 25,452 | (36,057) | (1,861) | |||||||||||||||||||
Loss on extinguishment of debt | (499) | — | (2,197) | (2,377) | |||||||||||||||||||
Other (loss) income, net | (964) | 357 | (6,416) | 687 | |||||||||||||||||||
Total other income | 77,055 | 121,308 | 205,563 | 145,654 | |||||||||||||||||||
Income before income taxes | 147,988 | 179,577 | 395,775 | 258,242 | |||||||||||||||||||
Income tax provision | (7,501) | (14,843) | (6,378) | (6,816) | |||||||||||||||||||
Net income | 140,487 | 164,734 | 389,397 | 251,426 | |||||||||||||||||||
Net income attributable to non-controlling interests | (11,885) | (12,900) | (33,107) | (26,705) | |||||||||||||||||||
Net income attributable to Starwood Property Trust, Inc. | $ | 128,602 | $ | 151,834 | $ | 356,290 | $ | 224,721 | |||||||||||||||
Earnings per share data attributable to Starwood Property Trust, Inc.: | |||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.53 | $ | 1.23 | $ | 0.79 | |||||||||||||||
Diluted | $ | 0.44 | $ | 0.52 | $ | 1.22 | $ | 0.79 |
6
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| For the Three Months Ended |
| For the Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2020 | | 2019 | | 2020 | | 2019 | ||||
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 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income | $ | 140,487 | $ | 164,734 | $ | 389,397 | $ | 251,426 | |||||||||||||||
Other comprehensive (loss) income (net change by component): | |||||||||||||||||||||||
Available-for-sale securities | (824) | (581) | (3,571) | (8,647) | |||||||||||||||||||
Foreign currency translation | — | — | 64 | — | |||||||||||||||||||
Other comprehensive loss | (824) | (581) | (3,507) | (8,647) | |||||||||||||||||||
Comprehensive income | 139,663 | 164,153 | 385,890 | 242,779 | |||||||||||||||||||
Less: Comprehensive income attributable to non-controlling interests | (11,885) | (12,900) | (33,107) | (26,705) | |||||||||||||||||||
Comprehensive income attributable to Starwood Property Trust, Inc. | $ | 127,778 | $ | 151,253 | $ | 352,783 | $ | 216,074 |
7
2020
Common stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Starwood Property Trust, Inc. Stockholders’ Equity | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 295,257,898 | $ | 2,952 | $ | 5,248,490 | 7,448,691 | $ | (138,022) | $ | (677,375) | $ | 41,310 | $ | 4,477,355 | $ | 374,345 | $ | 4,851,700 | |||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 8,161 | — | 209 | — | — | — | — | 209 | — | 209 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | 465,679 | 5 | 9,617 | — | — | — | — | 9,622 | (9,622) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (5) | — | — | — | — | (5) | — | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 243,201 | 3 | 9,449 | — | — | — | — | 9,452 | — | 9,452 | |||||||||||||||||||||||||||||||||||||||||||||||||
Manager fees paid in stock | 97,151 | 1 | 2,505 | — | — | — | — | 2,506 | — | 2,506 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 128,602 | — | 128,602 | 11,885 | 140,487 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $0.48 per share | — | — | — | — | — | (139,207) | — | (139,207) | — | (139,207) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (824) | (824) | — | (824) | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 52 | 52 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (17,258) | (17,258) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 296,072,090 | $ | 2,961 | $ | 5,270,265 | 7,448,691 | $ | (138,022) | $ | (687,980) | $ | 40,486 | $ | 4,487,710 | $ | 359,402 | $ | 4,847,112 | |||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 291,573,083 | $ | 2,916 | $ | 5,193,572 | 7,105,561 | $ | (133,024) | $ | (614,093) | $ | 42,866 | $ | 4,492,237 | $ | 372,559 | $ | 4,864,796 | |||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 34,309 | 1 | 520 | — | — | — | — | 521 | — | 521 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | — | — | 418 | — | — | — | — | 418 | (1,703) | (1,285) | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (54) | — | — | — | — | (54) | — | (54) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 179,935 | 1 | 6,260 | — | — | — | — | 6,261 | — | 6,261 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 151,834 | — | 151,834 | 12,900 | 164,734 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $0.48 per share | — | — | — | — | — | (136,755) | — | (136,755) | — | (136,755) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (581) | (581) | — | (581) | |||||||||||||||||||||||||||||||||||||||||||||||||
VIE non-controlling interests | — | — | — | — | — | — | — | — | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 251 | 251 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (12,207) | (12,207) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | 291,787,327 | $ | 2,918 | $ | 5,200,716 | 7,105,561 | $ | (133,024) | $ | (599,014) | $ | 42,285 | $ | 4,513,881 | $ | 371,812 | $ | 4,885,693 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Total | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Starwood | | | | | | | ||
| | | | | | | | | | | | | | | | | Accumulated | | Property | | | | | | | |||
| | Common stock | | Additional | | | | | | | | | Other | | Trust, Inc. | | Non- | | | | ||||||||
| | | | Par | | Paid-in | | Treasury Stock | | Accumulated | | Comprehensive | | Stockholders’ | | Controlling | | Total | ||||||||||
|
| Shares |
| Value |
| Capital |
| Shares |
| Amount |
| Deficit |
| Income |
| Equity |
| Interests |
| Equity | ||||||||
Balance, June 30, 2020 |
| 291,573,083 | | $ | 2,916 | | $ | 5,193,572 |
| 7,105,561 | | $ | (133,024) | | $ | (614,093) | | $ | 42,866 | | $ | 4,492,237 | | $ | 372,559 | | $ | 4,864,796 |
Proceeds from DRIP Plan | | 34,309 | | | 1 | | | 520 | | — | | | — | | | — | | | — | | | 521 | | | — | | | 521 |
Redemption of Class A Units | | — | | | — | | | 418 | | — | | | — | | | — | | | — | | | 418 | | | (1,703) | | | (1,285) |
Equity offering costs | | — | | | — | | | (54) | | — | | | — | | | — | | | — | | | (54) | | | — | | | (54) |
Share-based compensation | | 179,935 | | | 1 | | | 6,260 | | — | | | — | | | — | | | — | | | 6,261 | | | — | | | 6,261 |
Net income |
| — | | | — | | | — | | — | | | — | | | 151,834 | | | — | | | 151,834 | | | 12,900 | | | 164,734 |
Dividends declared, $0.48 per share |
| — | | | — | | | — | | — | | | — | | | (136,755) | | | — | | | (136,755) | | | — | | | (136,755) |
Other comprehensive loss, net |
| — | | | — | | | — | | — | | | — | | | — | | | (581) | | | (581) | | | — | | | (581) |
VIE non-controlling interests | | — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | 12 | | | 12 |
Contributions from non-controlling interests | | — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | 251 | | | 251 |
Distributions to non-controlling interests |
| — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | (12,207) | | | (12,207) |
Balance, September 30, 2020 |
| 291,787,327 | | $ | 2,918 | | $ | 5,200,716 |
| 7,105,561 | | $ | (133,024) | | $ | (599,014) | | $ | 42,285 | | $ | 4,513,881 | | $ | 371,812 | | $ | 4,885,693 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2019 |
| 286,451,361 | | $ | 2,864 | | $ | 5,103,771 | | 5,180,140 | | $ | (104,194) | | $ | (421,858) | | $ | 57,124 | | $ | 4,637,707 | | $ | 265,544 | | $ | 4,903,251 |
Proceeds from DRIP Plan |
| 10,751 | | | — | | | 253 |
| — | | | — | | | — | | | — | | | 253 | | | — | | | 253 |
Redemption of Class A Units for common stock | | 219,831 | | | 2 | | | 4,695 |
| — | | | — | | | — | | | — | | | 4,697 | | | (4,697) | | | — |
Equity offering costs |
| — | | | — | | | (19) |
| — | | | — | | | — | | | — | | | (19) | | | — | | | (19) |
Share-based compensation |
| 435,216 | | | 5 | | | 12,971 |
| — | | | — | | | — | | | — | | | 12,976 | | | — | |
| 12,976 |
Net income |
| — | | | — | | | — |
| — | | | — | | | 140,396 | | | — | | | 140,396 | | | 9,605 | |
| 150,001 |
Dividends declared, $0.48 per share |
| — | | | — | | | — |
| — | | | — | | | (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, September 30, 2019 |
| 287,117,159 | | $ | 2,871 | | $ | 5,121,671 |
| 5,180,140 | | $ | (104,194) | | $ | (417,529) | | $ | 52,377 | | $ | 4,655,196 | | $ | 257,818 | | $ | 4,913,014 |
8
Starwood Property Trust, Inc. and Subsidiaries
(Continued)
Common stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Starwood Property Trust, Inc. Stockholders’ Equity | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 292,091,601 | $ | 2,921 | $ | 5,209,739 | 7,448,691 | $ | (138,022) | $ | (629,733) | $ | 43,993 | $ | 4,488,898 | $ | 373,678 | $ | 4,862,576 | |||||||||||||||||||||||||||||||||||||||||
Cumulative effect of convertible notes accounting standard update adopted January 1, 2021 | — | — | (3,755) | — | — | 2,219 | — | (1,536) | — | (1,536) | |||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 29,331 | — | 697 | — | — | — | — | 697 | — | 697 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | 853,681 | 9 | 17,729 | — | — | — | — | 17,738 | (17,738) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (27) | — | — | — | — | (27) | — | (27) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 2,400,946 | 24 | 29,335 | — | — | — | — | 29,359 | — | 29,359 | |||||||||||||||||||||||||||||||||||||||||||||||||
Manager fees paid in stock | 696,531 | 7 | 16,547 | — | — | — | — | 16,554 | — | 16,554 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 356,290 | — | 356,290 | 33,107 | 389,397 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $1.44 per share | — | — | — | — | — | (416,756) | — | (416,756) | — | (416,756) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (3,507) | (3,507) | — | (3,507) | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 5,590 | 5,590 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (35,235) | (35,235) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 296,072,090 | $ | 2,961 | $ | 5,270,265 | 7,448,691 | $ | (138,022) | $ | (687,980) | $ | 40,486 | $ | 4,487,710 | $ | 359,402 | $ | 4,847,112 | |||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 287,380,891 | $ | 2,874 | $ | 5,132,532 | 5,180,140 | $ | (104,194) | $ | (381,719) | $ | 50,932 | $ | 4,700,425 | $ | 436,589 | $ | 5,137,014 | |||||||||||||||||||||||||||||||||||||||||
Cumulative effect of credit loss accounting standard effective January 1, 2020 | — | — | — | — | — | (32,286) | — | (32,286) | — | (32,286) | |||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 59,340 | 1 | 889 | — | — | — | — | 890 | — | 890 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | 409,712 | 4 | 8,952 | — | — | — | — | 8,956 | (10,241) | (1,285) | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (69) | — | — | — | — | (69) | — | (69) | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock repurchased | — | — | — | 1,925,421 | (28,830) | — | — | (28,830) | — | (28,830) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 1,516,152 | 15 | 22,390 | — | — | — | — | 22,405 | — | 22,405 | |||||||||||||||||||||||||||||||||||||||||||||||||
Manager fees paid in stock | 2,421,232 | 24 | 36,022 | — | — | — | — | 36,046 | — | 36,046 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 224,721 | — | 224,721 | 26,705 | 251,426 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $1.44 per share | — | — | — | — | — | (409,730) | — | (409,730) | — | (409,730) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (8,647) | (8,647) | — | (8,647) | |||||||||||||||||||||||||||||||||||||||||||||||||
VIE non-controlling interests | — | — | — | — | — | — | — | — | (2,177) | (2,177) | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 9,657 | 9,657 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (88,721) | (88,721) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | 291,787,327 | $ | 2,918 | $ | 5,200,716 | 7,105,561 | $ | (133,024) | $ | (599,014) | $ | 42,285 | $ | 4,513,881 | $ | 371,812 | $ | 4,885,693 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Total | | | | | | |
| |
| | | | | | | | | | | | | | | | | | | | Starwood | | | | | | |
| ||
| | | | | | | | | | | | | | | | | Accumulated | | Property | | | | | | |
| |||
| | Common stock | | Additional | | | | | | | | | Other | | Trust, Inc. | | Non- | | | |
| ||||||||
| | | | Par | | Paid-in | | Treasury Stock | | Accumulated | | Comprehensive | | Stockholders’ | | Controlling | | Total |
| ||||||||||
|
| Shares |
| Value |
| Capital |
| Shares |
| Amount |
| Deficit |
| Income |
| Equity |
| Interests |
| Equity |
| ||||||||
Balance, December 31, 2019 |
| 287,380,891 | | $ | 2,874 | | $ | 5,132,532 | | 5,180,140 | | $ | (104,194) | | $ | (381,719) | | $ | 50,932 | | $ | 4,700,425 | | $ | 436,589 | | $ | 5,137,014 | |
Cumulative effect of credit loss accounting standard effective January 1, 2020 | | — | | | — | | | — | | — | | | — | | | (32,286) | | | — | | | (32,286) | | | — | | | (32,286) | |
Proceeds from DRIP Plan | | 59,340 | | | 1 | | | 889 | | — | | | — | | | — | | | — | | | 890 | | | — | | | 890 | |
Redemption of Class A Units | | 409,712 | | | 4 | | | 8,952 | | — | | | — | | | — | | | — | | | 8,956 | | | (10,241) | | | (1,285) | |
Equity offering costs | | — | | | — | | | (69) | | — | | | — | | | — | | | — | | | (69) | | | — | | | (69) | |
Common stock repurchased | | — | | | — | | | — | | 1,925,421 | | | (28,830) | | | — | | | — | | | (28,830) | | | — | | | (28,830) | |
Share-based compensation | | 1,516,152 | | | 15 | | | 22,390 | | — | | | — | | | — | | | — | | | 22,405 | | | — | | | 22,405 | |
Manager fees paid in stock |
| 2,421,232 | | | 24 | | | 36,022 | | — | | | — | | | — | | | — | | | 36,046 | | | — | | | 36,046 | |
Net income |
| — | | | — | | | — | | — | | | — | | | 224,721 | | | — | | | 224,721 | | | 26,705 | | | 251,426 | |
Dividends declared, $1.44 per share |
| — | | | — | | | — | | — | | | — | | | (409,730) | | | — | | | (409,730) | | | — | | | (409,730) | |
Other comprehensive loss, net |
| — | | | — | | | — | | — | | | — | | | — | | | (8,647) | | | (8,647) | | | — | | | (8,647) | |
VIE non-controlling interests | | — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | (2,177) | | | (2,177) | |
Contributions from non-controlling interests | | — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | 9,657 | | | 9,657 | |
Distributions to non-controlling interests |
| — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | (88,721) | | | (88,721) | |
Balance, September 30, 2020 |
| 291,787,327 | | $ | 2,918 | | $ | 5,200,716 |
| 7,105,561 | | $ | (133,024) | | $ | (599,014) | | $ | 42,285 | | $ | 4,513,881 | | $ | 371,812 | | $ | 4,885,693 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2018 |
| 280,839,692 | | $ | 2,808 | | $ | 4,995,156 | | 5,180,140 | | $ | (104,194) | | $ | (348,998) | | $ | 58,660 | | $ | 4,603,432 | | $ | 296,757 | | $ | 4,900,189 | |
Proceeds from DRIP Plan | | 27,887 | | | — | | | 632 | | — | | | — | | | — | | | — | | | 632 | | | — | | | 632 | |
Redemption of Class A Units | | 974,176 | | | 10 | | | 21,060 | | — | | | — | | | — | | | — | | | 21,070 | | | (21,070) | | | — | |
Equity offering costs | | — | | | — | | | (27) | | — | | | — | | | — | | | — | | | (27) | | | — | | | (27) | |
Conversion of 2019 Convertible Notes | | 3,611,918 | | | 36 | | | 67,526 | | — | | | — | | | — | | | — | | | 67,562 | | | — | | | 67,562 | |
Share-based compensation |
| 1,168,123 | | | 12 | | | 26,352 | | — | | | — | | | — | | | — | | | 26,364 | | | — | |
| 26,364 | |
Manager fees paid in stock |
| 495,363 | | | 5 | | | 10,972 | | — | | | — | | | — | | | — | | | 10,977 | | | — | |
| 10,977 | |
Net income |
| — | | | — | | | — | | — | | | — | | | 337,795 | | | — | | | 337,795 | | | 21,160 | |
| 358,955 | |
Dividends declared, $1.44 per share |
| — | | | — | | | — | | — | | | — | | | (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, September 30, 2019 |
| 287,117,159 | | $ | 2,871 | | $ | 5,121,671 |
| 5,180,140 | | $ | (104,194) | | $ | (417,529) | | $ | 52,377 | | $ | 4,655,196 | | $ | 257,818 | | $ | 4,913,014 | |
9
| | | | | | |
| | For the Nine Months Ended | ||||
| | September 30, | ||||
|
| 2020 |
| 2019 | ||
Cash Flows from Operating Activities: | | | | | | |
Net income | | $ | 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 | |
| (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 | |
| (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 | |
| 55,284 | |
| 3,242 |
Depreciation and amortization | |
| 70,626 | |
| 86,172 |
(Earnings) loss from unconsolidated entities | |
| (32,065) | |
| 31,636 |
Distributions of earnings from unconsolidated entities | |
| 2,334 | |
| 9,730 |
Loss on extinguishment of debt | | | 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 | |
| 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 |
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash Flows from Operating Activities: | |||||||||||
Net income | $ | 389,397 | $ | 251,426 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Amortization of deferred financing costs, premiums and discounts on secured borrowings | 32,141 | 29,996 | |||||||||
Amortization of discounts and deferred financing costs on unsecured senior notes | 5,387 | 5,933 | |||||||||
Accretion of net discount on investment securities | (10,090) | (9,362) | |||||||||
Accretion of net deferred loan fees and discounts | (44,523) | (30,468) | |||||||||
Share-based compensation | 29,359 | 22,405 | |||||||||
Manager fees paid in stock | 16,554 | 36,046 | |||||||||
Change in fair value of investment securities | (903) | (3,132) | |||||||||
Change in fair value of consolidated VIEs | 26,990 | 41,008 | |||||||||
Change in fair value of servicing rights | (2,740) | 2,328 | |||||||||
Change in fair value of loans | (68,116) | (79,700) | |||||||||
Change in fair value of derivatives | (70,661) | 41,146 | |||||||||
Foreign currency loss, net | 36,057 | 1,861 | |||||||||
Gain on sale of investments and other assets | (26,377) | (6,768) | |||||||||
Credit loss (reversal) provision, net | (12,363) | 55,284 | |||||||||
Depreciation and amortization | 67,653 | 70,626 | |||||||||
Earnings from unconsolidated entities | (6,002) | (32,065) | |||||||||
Distributions of earnings from unconsolidated entities | 1,623 | 2,334 | |||||||||
Loss on extinguishment of debt | 2,197 | 2,377 | |||||||||
Origination and purchase of loans held-for-sale, net of principal collections | (3,027,235) | (1,725,341) | |||||||||
Proceeds from sale of loans held-for-sale | 2,333,767 | 1,997,651 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Related-party payable, net | (15,792) | (18,829) | |||||||||
Accrued and capitalized interest receivable, less purchased interest | (105,039) | (121,923) | |||||||||
Other assets | (27,236) | 3,007 | |||||||||
Accounts payable, accrued expenses and other liabilities | 14,199 | (9,691) | |||||||||
Net cash (used in) provided by operating activities | (461,753) | 526,149 | |||||||||
Cash Flows from Investing Activities: | |||||||||||
Origination, purchase and funding of loans held-for-investment | (5,635,707) | (2,368,931) | |||||||||
Proceeds from principal collections on loans | 3,173,764 | 1,357,445 | |||||||||
Proceeds from loans sold | 267,349 | 435,097 | |||||||||
Purchase and funding of investment securities | — | (22,408) | |||||||||
Proceeds from sales of investment securities | — | 7,940 | |||||||||
Proceeds from principal collections on investment securities | 77,855 | 67,957 | |||||||||
Proceeds from sales of real estate | 60,969 | 23,805 | |||||||||
Purchases and additions to properties and other assets | (17,259) | (17,923) | |||||||||
Investment in unconsolidated entities | — | (3,133) | |||||||||
Proceeds from sale of interest in unconsolidated entities | — | 10,313 | |||||||||
Distribution of capital from unconsolidated entities | 25,555 | 2,485 | |||||||||
Payments for purchase or termination of derivatives | (14,699) | (76,270) | |||||||||
Proceeds from termination of derivatives | 44,742 | 13,667 | |||||||||
Net cash used in investing activities | (2,017,431) | $ | (569,956) | ||||||||
10
Starwood Property Trust, Inc. and Subsidiaries
| | | | | | |
| | For the Nine Months Ended | ||||
| | September 30, | ||||
|
| 2020 |
| 2019 | ||
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 |
Effect of exchange rate changes on cash | |
| 902 | |
| (2,702) |
Cash, cash equivalents and restricted cash, end of period | | $ | 511,206 | | $ | 394,658 |
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 |
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 loans held-for-investment to held-for-sale | | | 449,025 | | | — |
Reclassification of 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 for common stock | | | 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 |
| | | | | | |
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash Flows from Financing Activities: | |||||||||||
Proceeds from borrowings | $ | 11,654,848 | $ | 4,935,556 | |||||||
Principal repayments on and repurchases of borrowings | (8,566,856) | (4,221,999) | |||||||||
Payment of deferred financing costs | (46,196) | (17,978) | |||||||||
Proceeds from common stock issuances | 697 | 511 | |||||||||
Payment of equity offering costs | (27) | (69) | |||||||||
Payment of dividends | (414,977) | (408,893) | |||||||||
Contributions from non-controlling interests | 5,590 | 9,657 | |||||||||
Distributions to non-controlling interests | (35,235) | (90,006) | |||||||||
Purchase of treasury stock | — | (28,830) | |||||||||
Issuance of debt of consolidated VIEs | 69,399 | 24,376 | |||||||||
Repayment of debt of consolidated VIEs | (608,435) | (279,419) | |||||||||
Distributions of cash from consolidated VIEs | 83,785 | 57,174 | |||||||||
Net cash provided by (used in) financing activities | 2,142,593 | (19,920) | |||||||||
Net decrease in cash, cash equivalents and restricted cash | (336,591) | (63,727) | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | 722,162 | 574,031 | |||||||||
Effect of exchange rate changes on cash | (1,783) | 902 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 383,788 | $ | 511,206 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 276,783 | $ | 284,855 | |||||||
Income taxes paid | 7,036 | 2,261 | |||||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Dividends declared, but not yet paid | $ | 140,465 | $ | 138,737 | |||||||
Consolidation of VIEs (VIE asset/liability additions) | 4,427,479 | 3,589,657 | |||||||||
Deconsolidation of VIEs (VIE asset/liability reductions) | 935,855 | 7,652 | |||||||||
Reclassification of loans held-for-investment to loans held-for-sale | 237,132 | 449,025 | |||||||||
Reclassification of loans held-for-sale to loans held-for-investment | 124,932 | 104,327 | |||||||||
Transfer of loans from VIE assets to residential loans upon redemption of consolidated RMBS trusts | 432,926 | — | |||||||||
Loan principal collections temporarily held at master servicer | 119,925 | 9,911 | |||||||||
Net assets acquired through conversion to equity interest and foreclosure | 36,308 | — | |||||||||
Redemption of Class A Units for common stock | 17,738 | 8,538 | |||||||||
Unsettled derivative transactions | 4,047 | — | |||||||||
Unsettled common stock issuances | — | 379 |
11
2021
Organization
Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.
Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.
Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.
12
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, 20192020 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”).
13
We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We
14
We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our condensed consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.”
For these reasons, the assets of our securitization VIEs are presented in the aggregate.
15
Fair Value Measurements
As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, 0no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 19 for further discussion regarding our fair value measurements.
Loans and Debt Securities Measured at Amortized Cost
16
Available-for-Sale Debt Securities
Effective January 1, 2021, the Company early adopted ASU 2017-04, Goodwill2020-06, Debt—Debt with Conversion and Other (Topic 350) – SimplifyingOptions (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40), which removes certain separation models for convertible debt instruments and convertible preferred stock that require the Testseparation into a debt component and an equity or derivative component. Consequently, our convertible senior notes (the “Convertible Notes”), which were previously accounted for Goodwill Impairment, became effectiveas having separate liability and equity components, are now accounted for as a single liability measured at amortized cost. The standard was adopted using the Company onmodified retrospective method of transition, which resulted in a cumulative decrease to additional paid-in capital of $3.7 million, partially offset by a cumulative decrease to accumulated deficit of $2.2 million as of January 1, 2020. This ASU specifies that goodwill impairment be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment.
2021.
17
Servicing Fees
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
18
our consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2020.2021. However, uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and our business in particular, makes any estimates and assumptions as of September 30, 20202021 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates.
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), which
sold a property within the Investing and Servicing Segment Property Portfolio
("REIS Equity Portfolio") for $30.9 million. In connection with this sale, we recognized a gain of $9.7 million within gain on sale of investments and other assets in our condensed consolidated statements of operations. During the nine months ended September 30, 2020, we sold a property within the Investing and Servicing SegmentREIS Equity Portfolio 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 statementstatements of operations. There were no significant sales of properties during the three months ended September 30, 2020.
properties or businesses.
19
| | | | | | | | | | |
|
| | |
| | |
| |
| 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 | | | | | | | |
September 30, 2021 | Carrying Value | Face Amount | Weighted Average Coupon (1) | Weighted Average Life (“WAL”) (years)(2) | ||||||||||||||||||||||
Loans held-for-investment: | ||||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||
First mortgages (3) | $ | 10,984,936 | $ | 11,043,211 | 4.9 | % | 1.8 | |||||||||||||||||||
Subordinated mortgages (4) | 81,159 | 82,916 | 9.6 | % | 3.0 | |||||||||||||||||||||
Mezzanine loans (3) | 477,227 | 474,105 | 9.6 | % | 1.3 | |||||||||||||||||||||
Other | 17,689 | 19,450 | 8.2 | % | 2.3 | |||||||||||||||||||||
Total commercial loans | 11,561,011 | 11,619,682 | ||||||||||||||||||||||||
Infrastructure first priority loans (5) | 1,698,061 | 1,719,931 | 4.3 | % | 3.9 | |||||||||||||||||||||
Residential loans, fair value option (6) | 91,499 | 91,280 | 6.1 | % | N/A | (7) | ||||||||||||||||||||
Total loans held-for-investment | 13,350,571 | 13,430,893 | ||||||||||||||||||||||||
Loans held-for-sale: | ||||||||||||||||||||||||||
Residential, fair value option (6) | 1,813,458 | 1,758,342 | 4.3 | % | N/A | (7) | ||||||||||||||||||||
Commercial, fair value option | 285,808 | 278,736 | 3.6 | % | 9.7 | |||||||||||||||||||||
Infrastructure, lower of cost or fair value (5) | 84,253 | 84,457 | 2.8 | % | 1.5 | |||||||||||||||||||||
Total loans held-for-sale | 2,183,519 | 2,121,535 | ||||||||||||||||||||||||
Total gross loans | 15,534,090 | $ | 15,552,428 | |||||||||||||||||||||||
Credit loss allowances: | ||||||||||||||||||||||||||
Commercial loans held-for-investment | (48,359) | |||||||||||||||||||||||||
Infrastructure loans held-for-investment | (9,214) | |||||||||||||||||||||||||
Total allowances | (57,573) | |||||||||||||||||||||||||
Total net loans | $ | 15,476,517 | ||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||
Loans held-for-investment: | ||||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||
First mortgages (3) | $ | 8,931,772 | $ | 8,978,373 | 5.3 | % | 1.5 | |||||||||||||||||||
Subordinated mortgages (4) | 71,185 | 72,257 | 8.8 | % | 2.8 | |||||||||||||||||||||
Mezzanine loans (3) | 620,319 | 619,352 | 10.1 | % | 1.6 | |||||||||||||||||||||
Other | 30,284 | 33,626 | 8.9 | % | 1.8 | |||||||||||||||||||||
Total commercial loans | 9,653,560 | 9,703,608 | ||||||||||||||||||||||||
Infrastructure first priority loans | 1,420,273 | 1,439,940 | 4.4 | % | 4.3 | |||||||||||||||||||||
Residential loans, fair value option | 90,684 | 86,796 | 6.0 | % | N/A | (7) | ||||||||||||||||||||
Total loans held-for-investment | 11,164,517 | 11,230,344 | ||||||||||||||||||||||||
Loans held-for-sale: | ||||||||||||||||||||||||||
Residential, fair value option | 841,963 | 820,807 | 6.0 | % | N/A | (7) | ||||||||||||||||||||
Commercial, fair value option | 90,332 | 90,789 | 3.9 | % | 10.0 | |||||||||||||||||||||
Infrastructure, lower of cost or fair value | 120,540 | 120,900 | 3.1 | % | 3.2 | |||||||||||||||||||||
Total loans held-for-sale | 1,052,835 | 1,032,496 | ||||||||||||||||||||||||
Total gross loans | 12,217,352 | $ | 12,262,840 | |||||||||||||||||||||||
Credit loss allowances: | ||||||||||||||||||||||||||
Commercial loans held-for-investment | (69,611) | |||||||||||||||||||||||||
Infrastructure loans held-for-investment | (7,833) | |||||||||||||||||||||||||
Total allowances | (77,444) | |||||||||||||||||||||||||
Total net loans | $ | 12,139,908 |
20
(2)
Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition.
First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $1.2 billion and $877.3 million being classified as first mortgages as of September 30, 2021 and December 31, 2020, respectively.
Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
During the nine months ended September 30, 2021, $30.7 million of infrastructure loans held-for-sale were reclassified into loans held-for-investment.
September 30, 2021 | Carrying Value | Weighted-average Spread Above Index | |||||||||
Commercial loans | $ | 11,114,900 | 4.2 | % | |||||||
Infrastructure loans | 1,698,061 | 3.9 | % | ||||||||
Total variable rate loans held-for-investment | $ | 12,812,961 | 4.2 | % |
| | | | | | |
| | Carrying | | Weighted-average | | |
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
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
21
for such differentiation. Accordingly, we have selected a more adverse macroeconomic recovery forecast related to these property types in determining our credit loss allowance.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Term Loans |
| Revolving Loans |
| Total |
| Credit | |||||||||||||||||||
| | Amortized Cost Basis by Origination Year | | Amortized Cost | | Amortized | | Loss | |||||||||||||||||||
As of 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 |
Term Loans Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Total | Total Amortized Cost Basis | Credit Loss Allowance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2021 | 2021 | 2020 | 2019 | 2018 | 2017 | Prior | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit quality indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTV < 60% | $ | 2,055,283 | $ | 758,931 | $ | 1,185,385 | $ | 595,145 | $ | 657,732 | $ | 287,335 | $ | — | $ | 5,539,811 | $ | 8,226 | ||||||||||||||||||||||||||||||||||||||
LTV 60% - 70% | 2,136,337 | 416,218 | 1,188,220 | 679,369 | — | 82,258 | — | 4,502,402 | 19,763 | |||||||||||||||||||||||||||||||||||||||||||||||
LTV > 70% | 329,066 | 272,581 | 473,177 | 352,473 | — | 61,835 | — | 1,489,132 | 12,104 | |||||||||||||||||||||||||||||||||||||||||||||||
Credit deteriorated | — | — | — | — | — | 11,977 | — | 11,977 | 8,266 | |||||||||||||||||||||||||||||||||||||||||||||||
Defeased and other | — | — | — | — | — | 17,689 | — | 17,689 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total commercial | $ | 4,520,686 | $ | 1,447,730 | $ | 2,846,782 | $ | 1,626,987 | $ | 657,732 | $ | 461,094 | $ | — | $ | 11,561,011 | $ | 48,359 | ||||||||||||||||||||||||||||||||||||||
Infrastructure loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit quality indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Power | $ | 98,003 | $ | 52,343 | $ | 217,061 | $ | 410,610 | $ | 121,482 | $ | 305,241 | $ | 9,111 | $ | 1,213,851 | $ | 5,108 | ||||||||||||||||||||||||||||||||||||||
Oil and gas | 64,547 | 17,376 | 254,266 | 98,924 | 45,113 | — | 3,984 | 484,210 | 4,106 | |||||||||||||||||||||||||||||||||||||||||||||||
Total infrastructure | $ | 162,550 | $ | 69,719 | $ | 471,327 | $ | 509,534 | $ | 166,595 | $ | 305,241 | $ | 13,095 | $ | 1,698,061 | $ | 9,214 | ||||||||||||||||||||||||||||||||||||||
Residential loans held-for-investment, fair value option | 91,499 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans held-for-sale | 2,183,519 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total gross loans | $ | 15,534,090 | $ | 57,573 |
22
addition to $113.4 million of these credit deteriorated loans, we had a $173.3$196.2 million commercial loan and $13.4$19.5 million of residential loans that were 90 days or greater past due at September 30, 2020.2021. In March 2021, $7.3 million relating to the $196.2 million commercial loan that was 90 days or greater past due was converted to equity interests pursuant to a consensual transfer under pre-existing equity pledges of additional collateral (see Note 7). The $196.2 million commercial loan, along with a $13.1 million infrastructure loan in forbearance, were placed on nonaccrual status in January 2021, but are not considered credit deteriorated as we presently expect to recover all amounts due. Any loans which are modified to provide for the deferral of interest are not considered past due and are accounted for in accordance with our revenue recognition policy on interest income.
| | | | | | | | | | | | |
| | Funded Commitments Credit Loss Allowance | ||||||||||
|
| |
| Loans |
| | ||||||
| | 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 |
23
Funded Commitments Credit Loss Allowance | ||||||||||||||||||||
Loans Held-for-Investment | Total Funded Loans | |||||||||||||||||||
Nine Months Ended September 30, 2021 | Commercial | Infrastructure | ||||||||||||||||||
Credit loss allowance at December 31, 2020 | $ | 69,611 | $ | 7,833 | $ | 77,444 | ||||||||||||||
Credit loss (reversal) provision, net | (13,238) | 1,124 | (12,114) | |||||||||||||||||
Charge-offs | (7,757) | (1) | — | (7,757) | ||||||||||||||||
Recoveries | — | — | — | |||||||||||||||||
Transfers | (257) | 257 | — | |||||||||||||||||
Credit loss allowance at September 30, 2021 | $ | 48,359 | $ | 9,214 | $ | 57,573 |
Unfunded Commitments Credit Loss Allowance (2) | |||||||||||||||||
Loans Held-for-Investment | |||||||||||||||||
Nine Months Ended September 30, 2021 | Commercial | Infrastructure | Total | ||||||||||||||
Credit loss allowance at December 31, 2020 | $ | 5,258 | $ | 812 | $ | 6,070 | |||||||||||
Credit loss reversal, net | (440) | (523) | (963) | ||||||||||||||
Credit loss allowance at September 30, 2021 | $ | 4,818 | $ | 289 | $ | 5,107 | |||||||||||
Memo: Unfunded commitments as of September 30, 2021 (3) | $ | 1,352,772 | $ | 32,080 | $ | 1,384,852 |
Table of Contents(2)Included in accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheets.
| | | | | | | | | | | | | | | |
| | Held-for-Investment Loans | | | | | | | |||||||
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 |
Held-for-Investment Loans | |||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2021 | Commercial | Infrastructure | Residential | Held-for-Sale Loans | Total Loans | ||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | 9,583,949 | $ | 1,412,440 | $ | 90,684 | $ | 1,052,835 | $ | 12,139,908 | |||||||||||||||||||||||||
Acquisitions/originations/additional funding | 5,242,378 | 393,329 | — | 3,151,361 | 8,787,068 | ||||||||||||||||||||||||||||||
Capitalized interest (1) | 89,830 | — | 2,068 | 2,062 | 93,960 | ||||||||||||||||||||||||||||||
Basis of loans sold (2) | (243,378) | — | — | (2,358,790) | (2,602,168) | ||||||||||||||||||||||||||||||
Loan maturities/principal repayments | (2,897,747) | (211,695) | (26,341) | (250,662) | (3,386,445) | ||||||||||||||||||||||||||||||
Discount accretion/premium amortization | 40,367 | 3,652 | — | 504 | 44,523 | ||||||||||||||||||||||||||||||
Changes in fair value | — | — | 1,837 | 66,279 | 68,116 | ||||||||||||||||||||||||||||||
Foreign currency translation loss, net | (75,094) | (840) | — | — | (75,934) | ||||||||||||||||||||||||||||||
Credit loss reversal (provision), net | 13,238 | (1,124) | — | — | 12,114 | ||||||||||||||||||||||||||||||
Loan foreclosure and conversion to equity interest | (36,308) | — | — | — | (36,308) | (3) | |||||||||||||||||||||||||||||
Transfer to/from other asset classifications or between segments | (204,583) | 93,085 | 23,251 | 519,930 | 431,683 | (4) | |||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | 11,512,652 | $ | 1,688,847 | $ | 91,499 | $ | 2,183,519 | $ | 15,476,517 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | 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 |
Held-for-Investment Loans | ||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2020 | Commercial | Infrastructure | Residential | Held-for-Sale Loans | Total Loans | |||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | 8,517,054 | $ | 1,397,448 | $ | 671,572 | $ | 884,150 | $ | 11,470,224 | ||||||||||||||||||||||
Cumulative effect of ASC 326 effective January 1, 2020 | (10,112) | (10,328) | — | — | (20,440) | |||||||||||||||||||||||||||
Acquisitions/originations/additional funding | 2,090,964 | 177,247 | 100,720 | 1,800,018 | 4,168,949 | |||||||||||||||||||||||||||
Capitalized interest (1) | 105,329 | 48 | — | — | 105,377 | |||||||||||||||||||||||||||
Basis of loans sold (2) | (397,038) | — | (604) | (2,035,770) | (2,433,412) | |||||||||||||||||||||||||||
Loan maturities/principal repayments | (1,148,317) | (96,150) | (76,025) | (75,632) | (1,396,124) | |||||||||||||||||||||||||||
Discount accretion/premium amortization | 28,686 | 1,672 | — | 110 | 30,468 | |||||||||||||||||||||||||||
Changes in fair value | — | — | (16,565) | 96,265 | 79,700 | |||||||||||||||||||||||||||
Foreign currency translation loss, net | (15,279) | (38) | — | (1,291) | (16,608) | |||||||||||||||||||||||||||
Credit loss (provision) reversal, net | (53,110) | (3,824) | — | 125 | (56,809) | |||||||||||||||||||||||||||
Transfer to/from other asset classifications | — | 77,993 | (422,691) | 344,698 | — | |||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | 9,118,177 | $ | 1,544,068 | $ | 256,407 | $ | 1,012,673 | $ | 11,931,325 |
(2) See Note 11 for additional disclosure on these transactions.
24
Carrying Value as of | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
RMBS, available-for-sale | $ | 148,583 | $ | 167,349 | |||||||
RMBS, fair value option (1) | 215,152 | 235,997 | |||||||||
CMBS, fair value option (1), (2) | 1,227,119 | 1,209,030 | |||||||||
HTM debt securities, amortized cost net of credit loss allowance of $6,389 and $5,675 | 486,734 | 538,605 | |||||||||
Equity security, fair value | 12,067 | 11,247 | |||||||||
Subtotal—Investment securities | 2,089,655 | 2,162,228 | |||||||||
VIE eliminations (1) | (1,418,768) | (1,425,570) | |||||||||
Total investment securities | $ | 670,887 | $ | 736,658 |
| | | | | | |
| | Carrying Value as of | ||||
| | 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—Investment securities | |
| 2,289,497 | |
| 2,215,275 |
VIE eliminations (1) | |
| (1,544,384) | | | (1,405,037) |
Total investment securities | | $ | 745,113 | | $ | 810,238 |
Purchases, sales, and principal collections and redemptions for all investment securities were as follows (amounts in thousands):
RMBS, available-for-sale | RMBS, fair value option | CMBS, fair value option | HTM Securities | Securitization VIEs (1) | Total | ||||||||||||||||||||||||||||||
Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
Purchases | $ | — | $ | 33,009 | $ | 8,383 | $ | — | $ | (41,392) | $ | — | |||||||||||||||||||||||
Sales | — | — | 27,111 | — | (27,111) | — | |||||||||||||||||||||||||||||
Principal collections | 7,881 | 14,204 | 706 | 752 | (14,555) | 8,988 | |||||||||||||||||||||||||||||
Redemptions | — | 26,753 | — | — | (26,753) | — | |||||||||||||||||||||||||||||
Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
Purchases/fundings | $ | — | $ | 43,083 | $ | — | $ | 6,288 | $ | (43,083) | $ | 6,288 | |||||||||||||||||||||||
Principal collections | 6,063 | 12,132 | 8,265 | 11,203 | (20,185) | 17,478 |
RMBS, available-for-sale | RMBS, fair value option | CMBS, fair value option | HTM Securities | Securitization VIEs (1) | Total | ||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
Purchases | $ | — | $ | 112,693 | $ | 62,465 | $ | — | $ | (175,158) | $ | — | |||||||||||||||||||||||
Sales | — | 30,684 | 38,715 | — | (69,399) | — | |||||||||||||||||||||||||||||
Principal collections | 22,995 | 42,235 | 4,429 | 53,321 | (45,125) | 77,855 | |||||||||||||||||||||||||||||
Redemptions | — | 38,729 | — | — | (38,729) | — | |||||||||||||||||||||||||||||
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
Purchases/fundings | $ | — | $ | 257,808 | $ | 7,661 | $ | 22,408 | $ | (265,469) | $ | 22,408 | |||||||||||||||||||||||
Sales | — | — | 32,316 | — | (24,376) | 7,940 | |||||||||||||||||||||||||||||
Principal collections | 18,626 | 32,236 | 25,715 | 48,554 | (57,174) | 67,957 |
| | | | | | | | | | | | | | | | | | |
| | RMBS, | | RMBS, fair | | CMBS, fair | | HTM | | Securitization | | | | |||||
|
| available-for-sale |
| value option |
| value option |
| Securities |
| VIEs (1) |
| Total | ||||||
Three Months Ended 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 |
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, | | 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 |
25
The tables below summarize various attributes of our investments in available-for-sale RMBS as of September 30, 20202021 and December 31, 20192020 (amounts in thousands):
Unrealized Gains or (Losses) Recognized in AOCI | |||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Credit Loss Allowance | Net Basis | Gross Unrealized Gains | Gross Unrealized Losses | Net Fair Value Adjustment | Fair Value | |||||||||||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
RMBS | $ | 108,097 | $ | — | $ | 108,097 | $ | 40,486 | $ | — | $ | 40,486 | $ | 148,583 | |||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
RMBS | $ | 123,292 | $ | — | $ | 123,292 | $ | 44,123 | $ | (66) | $ | 44,057 | $ | 167,349 |
Weighted Average Coupon (1) | WAL (Years) (2) | ||||||||||
September 30, 2021 | |||||||||||
RMBS | 1.2 | % | 5.4 |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Unrealized Gains or (Losses) | | | | |||||||
| | | | | | | | | | | Recognized in AOCI | | | | |||||||
|
| |
| Credit |
| |
| Gross |
| Gross |
| Net |
| | | ||||||
| | Amortized | | Loss | | Net | | Unrealized | | Unrealized | | Fair Value | | | | ||||||
| | Cost | | Allowance | | Basis | | Gains | | Losses | | Adjustment | | Fair Value | |||||||
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 |
Calculated using the September 30, 2021 one-month LIBOR rate of 0.080% for floating rate securities.
| | | | | | |
|
| 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 |
As of September 30, 2020,2021, approximately $144.5$129.4 million, or 84.9%87%, 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%.rate. We purchased all of the RMBS at a discount, a portion of which is accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount.
Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||||
Securities with a loss less than 12 months | Securities with a loss greater than 12 months | Securities with a loss less than 12 months | Securities with a loss greater than 12 months | ||||||||||||||||||||
As of September 30, 2021 | |||||||||||||||||||||||
RMBS | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
As of December 31, 2020 | |||||||||||||||||||||||
RMBS | $ | 438 | $ | 1,195 | $ | (25) | $ | (41) |
| | | | | | | | | | | | | |
| | Estimated Fair Value | | Unrealized Losses |
| ||||||||
|
| Securities with a |
| Securities with a |
| Securities with a |
| Securities with a |
| ||||
| | loss less than | | loss greater than | | loss less than | | loss greater than |
| ||||
| | 12 months | | 12 months | | 12 months | | 12 months |
| ||||
As of September 30, 2020 | | | | | | | | | | | | | |
RMBS | | $ | 412 | | $ | 1,194 | | $ | (45) | | $ | (129) | |
As of December 31, 2019 | | | | | | | | | | | | | |
RMBS | | $ | — | | $ | 1,380 | | $ | — | | $ | (314) | |
26
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.
As of September 30, 2020, $96.92021, $98.2 million of our CMBS were variable rate and NaNnone of our RMBS were variable rate.
Amortized Cost Basis | Credit Loss Allowance | Net Carrying Amount | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Fair Value | ||||||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||||||||
CMBS | $ | 339,190 | $ | (1,593) | $ | 337,597 | $ | — | $ | (23,490) | $ | 314,107 | |||||||||||||||||||||||
Preferred interests | 117,692 | (1,877) | 115,815 | 3,415 | — | 119,230 | |||||||||||||||||||||||||||||
Infrastructure bonds | 36,241 | (2,919) | 33,322 | 498 | — | 33,820 | |||||||||||||||||||||||||||||
Total | $ | 493,123 | $ | (6,389) | $ | 486,734 | $ | 3,913 | $ | (23,490) | $ | 467,157 | |||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
CMBS | $ | 339,059 | $ | — | $ | 339,059 | $ | — | $ | (23,286) | $ | 315,773 | |||||||||||||||||||||||
Preferred interests | 166,614 | (2,749) | 163,865 | 432 | (913) | 163,384 | |||||||||||||||||||||||||||||
Infrastructure bonds | 38,607 | (2,926) | 35,681 | 415 | — | 36,096 | |||||||||||||||||||||||||||||
Total | $ | 544,280 | $ | (5,675) | $ | 538,605 | $ | 847 | $ | (24,199) | $ | 515,253 |
| | | | | | | | | | | | | | | | | | | |
| | Amortized | | Credit Loss | | Net Carrying | | Gross Unrealized | | Gross Unrealized | | | |
| |||||
| | Cost Basis | | Allowance | | Amount | | Holding Gains | | Holding Losses | | Fair Value |
| ||||||
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 | |
| | | | | | | | | |
| | | | | | 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 |
27
CMBS | Preferred Interests | Infrastructure Bonds | Total HTM Credit Loss Allowance | ||||||||||||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||
Credit loss allowance at December 31, 2020 | $ | — | $ | 2,749 | $ | 2,926 | $ | 5,675 | |||||||||||||||
Credit loss provision (reversal), net | 1,593 | (872) | (7) | 714 | |||||||||||||||||||
Credit loss allowance at September 30, 2021 | $ | 1,593 | $ | 1,877 | $ | 2,919 | $ | 6,389 |
The table below summarizes the maturities of our HTM debt securities by type as of September 30, 20202021 (amounts in thousands):
CMBS | Preferred Interests | Infrastructure Bonds | Total | ||||||||||||||||||||
Less than one year | $ | 313,928 | $ | — | $ | — | $ | 313,928 | |||||||||||||||
One to three years | 23,669 | 115,815 | — | 139,484 | |||||||||||||||||||
Three to five years | — | — | 814 | 814 | |||||||||||||||||||
Thereafter | — | — | 32,508 | 32,508 | |||||||||||||||||||
Total | $ | 337,597 | $ | 115,815 | $ | 33,322 | $ | 486,734 |
| | | | | | | | | | | | |
| | | | Preferred | | Infrastructure | | | ||||
| | CMBS | | Interests | | Bonds | | Total | ||||
Less than one year |
| $ | 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 |
2021.
2021.
Medical Office Portfolio
2021.
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$193.0 million as of September 30, 2020.2021.
28
The Investing and Servicing Segment Property Portfolio (“REIS Equity Portfolio”)Portfolio is comprised of 1514 commercial real estate properties and 1 equity interest in an unconsolidated commercial real estate property which were acquired from CMBS trusts during the previous five years. The REIS Equity Portfolio includes total gross properties and lease intangibles of $266.5$250.3 million and debt of $169.2$176.7 million as of September 30, 2020.
2021.
Depreciable Life | September 30, 2021 | December 31, 2020 | |||||||||||||||
Property Segment | |||||||||||||||||
Land and land improvements | 0 - 15 years | $ | 485,177 | $ | 484,846 | ||||||||||||
Buildings and building improvements | 0 - 45 years | 1,693,834 | 1,690,701 | ||||||||||||||
Furniture & fixtures | 3 - 7 years | 65,575 | 59,632 | ||||||||||||||
Investing and Servicing Segment | |||||||||||||||||
Land and land improvements | 0 - 15 years | 45,243 | 50,585 | ||||||||||||||
Buildings and building improvements | 3 - 40 years | 167,271 | 179,014 | ||||||||||||||
Furniture & fixtures | 2 - 5 years | 3,077 | 2,606 | ||||||||||||||
Commercial and Residential Lending Segment (1) | |||||||||||||||||
Land and land improvements | 0 - 7 years | 9,691 | 11,416 | ||||||||||||||
Buildings and building improvements | 10 - 20 years | 12,409 | 19,251 | ||||||||||||||
Construction in progress | N/A | 104,088 | 75,245 | ||||||||||||||
Properties, cost | 2,586,365 | 2,573,296 | |||||||||||||||
Less: accumulated depreciation | (357,503) | (302,143) | |||||||||||||||
Properties, net | $ | 2,228,862 | $ | 2,271,153 |
| | | | | | | | |
|
| Depreciable Life |
| 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 |
During the nine months ended September 30, 2021, we sold an operating property within the REIS Equity Portfolio for $30.9 million and recognized a gain of $9.7 million within gain on sale of investments and other assets in our condensed consolidated statements of operations. During the nine months ended September 30, 2020, we sold an operating property within the REIS Equity Portfolio for $24.1 million. In connection with this sale, wemillion and recognized a gain of $7.4 million within gain on sale of investments and other assets in our condensed consolidated statementstatements of operations.
29
Participation / Ownership % (1) | Carrying value as of | ||||||||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||||||||
Equity method investments: | |||||||||||||||||
Equity interest in a natural gas power plant | 10% | $ | 25,170 | $ | 25,095 | ||||||||||||
Investor entity which owns equity in an online real estate company (2) | 50% | 5,142 | 9,397 | ||||||||||||||
Equity interests in commercial real estate | 50% | 975 | 1,543 | ||||||||||||||
Equity interest in and advances to a residential mortgage originator (3) | N/A | 19,376 | 17,852 | ||||||||||||||
Various | 25% - 50% | 11,166 | 8,831 | ||||||||||||||
61,829 | 62,718 | ||||||||||||||||
Other equity investments: | |||||||||||||||||
Equity interest in a servicing and advisory business | 2% | 17,584 | 17,584 | ||||||||||||||
Investment funds which own equity in a loan servicer and other real estate assets | 4% - 6% | 7,267 | 7,267 | ||||||||||||||
Investor entities which own equity interests in two entertainment and retail centers (4) | 15% | 7,320 | — | ||||||||||||||
Federal Home Loan Bank stock | N/A | — | 20,485 | ||||||||||||||
32,171 | 45,336 | ||||||||||||||||
$ | 94,000 | $ | 108,054 |
| | | | | | | | |
| | Participation / | | Carrying value as of | ||||
|
| Ownership % (1) |
| 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 |
(2)
We own a 33% equity interest incapital distribution of $4.5 million, which reduced our carrying value.
2021, we obtained equity interests in 2 investor entities that own interests in 2 entertainment and retail centers in satisfaction of $7.3 million principal amount of a commercial loan. The interests were obtained in order to facilitate repayment of a portion of that loan for which these interests represented underlying collateral. The interests are entitled to preferred treatment in the distribution waterfall and are intended to repay us the $7.3 million principal amount of the loan plus interest. See further discussion in Note 4.
30
During the three and nine months ended September 30, 2020,2021, we did not become aware of (i) any observable price changes in our other equity investments accounted for under the fair value practicability exception, except as described above with respect to the servicing and advisory business,election or (ii) any indicators of impairment.
Goodwill
Infrastructure Lending Segment
31
As of September 30, 2021 | As of December 31, 2020 | ||||||||||||||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||
Domestic servicing rights, at fair value | $ | 15,942 | $ | — | $ | 15,942 | $ | 13,202 | $ | — | $ | 13,202 | |||||||||||||||||||||||
In-place lease intangible assets | 131,418 | (97,365) | 34,053 | 133,203 | (92,540) | 40,663 | |||||||||||||||||||||||||||||
Favorable lease intangible assets | 23,862 | (8,735) | 15,127 | 24,181 | (7,929) | 16,252 | |||||||||||||||||||||||||||||
Total net intangible assets | $ | 171,222 | $ | (106,100) | $ | 65,122 | $ | 170,586 | $ | (100,469) | $ | 70,117 |
| | | | | | | | | | | | | | | | | | |
| | 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 |
Domestic Servicing Rights | In-place Lease Intangible Assets | Favorable Lease Intangible Assets | Total | ||||||||||||||||||||
Balance as of January 1, 2021 | $ | 13,202 | $ | 40,663 | $ | 16,252 | $ | 70,117 | |||||||||||||||
Amortization | — | (6,250) | (1,056) | (7,306) | |||||||||||||||||||
Sales | — | (360) | (69) | (429) | |||||||||||||||||||
Changes in fair value due to changes in inputs and assumptions | 2,740 | — | — | 2,740 | |||||||||||||||||||
Balance as of September 30, 2021 | $ | 15,942 | $ | 34,053 | $ | 15,127 | $ | 65,122 |
| | | | | | | | | | | | |
| | Domestic | | In-place Lease | | Favorable Lease | | | ||||
| | Servicing | | Intangible | | Intangible | | | ||||
|
| Rights |
| Assets |
| Assets | | Total | ||||
Balance as of January 1, 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 |
| | | |
2020 (remainder of) |
| $ | 2,636 |
2021 | |
| 9,644 |
2022 | |
| 7,862 |
2023 | |
| 6,115 |
2024 | |
| 4,722 |
Thereafter | |
| 28,571 |
Total | | $ | 59,550 |
2021 (remainder of) | $ | 2,231 | |||
2022 | 7,783 | ||||
2023 | 6,043 | ||||
2024 | 4,650 | ||||
2025 | 3,775 | ||||
Thereafter | 24,698 | ||||
Total | $ | 49,180 |
32
Outstanding Balance at | |||||||||||||||||||||||||||||||||||||||||
Current Maturity | Extended Maturity (a) | Weighted Average Pricing | Pledged Asset Carrying Value | Maximum Facility Size | September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||
Repurchase Agreements: | |||||||||||||||||||||||||||||||||||||||||
Commercial Loans | Mar 2022 to Jul 2026 | (b) | Jun 2025 to Mar 2029 | (b) | (c) | $ | 7,750,853 | $ | 9,980,380 | (d) | $ | 5,294,281 | $ | 4,878,939 | |||||||||||||||||||||||||||
Residential Loans | Jun 2022 to Oct 2023 | N/A | LIBOR + 2.01% | 1,755,161 | 2,550,000 | 1,440,018 | 22,590 | ||||||||||||||||||||||||||||||||||
Infrastructure Loans | Sep 2024 | Sep 2026 | LIBOR + 2.00% | 467,921 | 650,000 | 368,442 | 232,961 | ||||||||||||||||||||||||||||||||||
Conduit Loans | Feb 2022 to Jun 2024 | Feb 2023 to Jun 2025 | LIBOR + 1.99% | 259,155 | 350,000 | 192,829 | 53,554 | ||||||||||||||||||||||||||||||||||
CMBS/RMBS | Dec 2021 to May 2031 | (e) | Sep 2022 to Nov 2031 | (e) | (f) | 1,193,808 | 835,850 | 709,340 | (g) | 620,763 | |||||||||||||||||||||||||||||||
Total Repurchase Agreements | 11,426,898 | 14,366,230 | 8,004,910 | 5,808,807 | |||||||||||||||||||||||||||||||||||||
Other Secured Financing: | |||||||||||||||||||||||||||||||||||||||||
Borrowing Base Facility | Apr 2022 | Apr 2024 | LIBOR + 2.25% | 73,502 | 650,000 | (h) | 2,000 | 43,014 | |||||||||||||||||||||||||||||||||
Commercial Financing Facility | Mar 2022 | Mar 2029 | GBP LIBOR + 1.75% | 177,424 | 142,872 | 142,872 | 81,218 | ||||||||||||||||||||||||||||||||||
Residential Financing Facility | Sep 2022 | Sep 2025 | 3.50% | 149,604 | 250,000 | 2,018 | 215,024 | ||||||||||||||||||||||||||||||||||
Infrastructure Acquisition Facility | N/A | N/A | N/A | — | — | — | 467,450 | ||||||||||||||||||||||||||||||||||
Infrastructure Financing Facilities | Jul 2022 to Oct 2022 | Oct 2024 to Jul 2027 | LIBOR + 2.03% | 688,488 | 1,250,000 | 544,582 | 538,645 | ||||||||||||||||||||||||||||||||||
Property Mortgages - Fixed rate | Nov 2024 to Aug 2052 | (i) | N/A | 4.03% | 1,254,141 | 1,154,763 | 1,154,763 | 1,077,528 | |||||||||||||||||||||||||||||||||
Property Mortgages - Variable rate | Nov 2021 to Jul 2030 | N/A | (j) | 898,634 | 969,790 | 945,311 | 960,903 | ||||||||||||||||||||||||||||||||||
Term Loan and Revolver | (k) | N/A | (k) | N/A | (k) | 940,750 | 790,750 | 645,000 | |||||||||||||||||||||||||||||||||
Federal Home Loan Bank | N/A | N/A | N/A | — | — | — | 396,000 | ||||||||||||||||||||||||||||||||||
Total Other Secured Financing | 3,241,793 | 5,358,175 | 3,582,296 | 4,424,782 | |||||||||||||||||||||||||||||||||||||
$ | 14,668,691 | $ | 19,724,405 | 11,587,206 | 10,233,589 | ||||||||||||||||||||||||||||||||||||
Unamortized net discount | (14,603) | (13,569) | |||||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | (70,551) | (73,830) | |||||||||||||||||||||||||||||||||||||||
$ | 11,502,052 | $ | 10,146,190 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Outstanding Balance at | ||||
| | Current | | Extended | | Weighted Average | | Pledged Asset | | Maximum | | 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 |
(e)Certain facilities with an outstanding balance of $292.8 million as of September 30, 2021 carry a rolling 11-month or 12-month term which may reset monthly or quarterly with the lender's consent. These facilities carry no maximum facility size. (f)A facility with an outstanding balance of $243.0 million as of September 30, 2021 has a weighted average fixed annual interest rate of 3.21%. All other facilities are variable rate with a weighted average rate of LIBOR + 1.76%. (g)Includes: (i) $243.0 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $35.8 million outstanding on one of our repurchase facilities that represents the 49% pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 14). (h)The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (i)The weighted average maturity is 6.0 years as of September 30, 2021. (j)Includes a $600.0 million first mortgage and mezzanine loan secured by our Medical Office Portfolio. This debt has a weighted average interest rate of LIBOR + 2.07% that we swapped to a fixed rate of 3.34%. The remainder have a weighted average rate of LIBOR + 2.61%. (k)Consists of: (i) a $790.8 million term loan facility that matures in July 2026, of which $392.0 million (the "Initial Borrowings") has an annual interest rate of LIBOR + 2.50% and $398.8 million (the "Incremental Borrowings") has an annual interest rate of LIBOR + 3.25%, subject to a 0.75% LIBOR floor, and (ii) a $150.0 million revolving credit |
33
facility that matures in April 2026 with an annual interest rate of SOFR + 2.50%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $4.7 billion as of September 30, 2021.
In February 2020, we amended a Commercial Loans repurchase facilitywas initially $375.0 million and was increased to increase available borrowings by $200.0 million to $1.8 billion.
$1.0 billion in March 2021.
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 3 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$82.9 million to refinance our Woodstar III Portfolio. The loans carry ten-yearseven-year terms and a weighted average fixed annual interest ratesrate of LIBOR + 2.71%4.36%. A portion of the net proceeds from the mortgage loans was used to repay $117.0$4.9 million of outstanding government sponsored mortgage loans. We recognized
Duringand was increased to $300.0 million during the three months ended September 30, 2020,2021.
In September 2020, we entered intoamended a Residential Loan FinancingLoans repurchase facility to finance residential loans held-for-sale.increase the available borrowings from $1.0 billion to $1.5 billion. The margin call provisions under this 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 doesdo not permit valuation adjustments based on capital markets activity.
market events and are limited to collateral-specific credit marks.
34
on capital markets activity. Instead, margin calls on these facilitiesmarket events and are limited to collateral-specific credit marks.marks generally determined on a commercially reasonable basis. 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%36% of repurchase agreements containing margin call provisions for generalwhich do permit valuation adjustments based on capital markets activity,market events, approximately 17%7% 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.
and Single Asset Securitization
September 30, 2021 | Count | Face Amount | Carrying Value | Weighted Average Spread | Maturity | ||||||||||||||||||||||||||||||
STWD 2019-FL1 | |||||||||||||||||||||||||||||||||||
Collateral assets | 25 | $ | 1,034,361 | $ | 1,103,259 | LIBOR + 4.23% | (a) | September 2024 | (b) | ||||||||||||||||||||||||||
Financing | 1 | 936,375 | 932,425 | SOFR + 1.63% | (c) | July 2038 | (d) | ||||||||||||||||||||||||||||
STWD 2021-FL2 | |||||||||||||||||||||||||||||||||||
Collateral assets | 25 | 1,269,744 | 1,279,245 | LIBOR + 4.23% | (a) | January 2025 | (b) | ||||||||||||||||||||||||||||
Financing | 1 | 1,077,375 | 1,069,014 | LIBOR + 1.78% | (c) | April 2038 | (d) | ||||||||||||||||||||||||||||
STWD 2021-SIF1 | |||||||||||||||||||||||||||||||||||
Collateral assets | 31 | 494,065 | 510,592 | LIBOR + 3.94% | (a) | March 2026 | (b) | ||||||||||||||||||||||||||||
Financing | 1 | 410,000 | 404,960 | LIBOR + 2.15% | (c) | April 2032 | (d) | ||||||||||||||||||||||||||||
STWD 2021-HTS | |||||||||||||||||||||||||||||||||||
Collateral assets | 1 | 230,000 | 230,562 | LIBOR + 4.34% | (a) | April 2026 | (b) | ||||||||||||||||||||||||||||
Financing | 1 | 210,091 | 207,831 | LIBOR + 2.47% | (c) | April 2034 | (d) | ||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Collateral assets | $ | 3,028,170 | $ | 3,123,658 | |||||||||||||||||||||||||||||||
Financing | $ | 2,633,841 | $ | 2,614,230 | |||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
STWD 2019-FL1 | |||||||||||||||||||||||||||||||||||
Collateral assets | 23 | $ | 1,002,445 | $ | 1,099,439 | LIBOR + 3.93% | (a) | April 2024 | (b) | ||||||||||||||||||||||||||
Financing | 1 | 936,375 | 930,554 | LIBOR + 1.64% | (c) | July 2038 | (d) |
SASB are tied to timing of the related collateral asset repayments. The term of the CLO and SASB financing obligation represents the legal final maturity date.
| | | | | | | | | | | | | |
| | | | 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) |
We incurred $9.2$26.9 million of issuance costs in connection with the CLO,CLOs and SASB, which are amortized on an effective yield basis over the estimated life of the CLO.CLOs and SASB. For the three and nine months ended September 30, 2021, approximately $1.8 million and $3.9 million, respectively, of amortization of deferred financing costs was included in interest expense on our condensed consolidated statements of operations. 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.expense. As of September 30, 20202021 and December 31, 2019,2020, our unamortized issuance costs were $6.4$19.6 million and $8.3$5.8 million, respectively.
The CLO isCLOs and SASB are considered a VIE,VIEs, for which we are deemed the primary beneficiary. We therefore consolidate the CLO.CLOs and SASB. Refer to Note 14 for further discussion.
Repurchase Agreements | Other Secured Financing | CLOs and SASB (a) | Total | ||||||||||||||||||||
2021 (remainder of) | $ | 273,583 | $ | 15,751 | $ | 4,103 | $ | 293,437 | |||||||||||||||
2022 | 1,998,566 | 35,189 | 125,338 | 2,159,093 | |||||||||||||||||||
2023 | 860,568 | 821,810 | 638,036 | 2,320,414 | |||||||||||||||||||
2024 | 824,181 | 214,086 | 485,408 | 1,523,675 | |||||||||||||||||||
2025 | 2,585,446 | 264,934 | 513,671 | 3,364,051 | |||||||||||||||||||
Thereafter | 1,462,566 | 2,230,526 | 867,285 | 4,560,377 | |||||||||||||||||||
Total | $ | 8,004,910 | $ | 3,582,296 | $ | 2,633,841 | $ | 14,221,047 |
For the CLOs, the above does not assume utilization of their reinvestment features. The SASB does not have a reinvestment feature.
| | | | | | | | | | | | |
|
| Repurchase |
| Other Secured |
| | | | ||||
| | Agreements | | Financing | | CLO | | Total | ||||
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 |
Coupon Rate | Effective Rate (1) | Maturity Date | Remaining Period of Amortization | Carrying Value at | ||||||||||||||||||||||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||
2021 Senior Notes (2) | 5.00 | % | 5.32 | % | 12/15/2021 | 0.2 years | $ | 300,000 | $ | 700,000 | ||||||||||||||||||||||||||||
2023 Senior Notes | 5.50 | % | 5.71 | % | 11/1/2023 | 2.1 years | 300,000 | 300,000 | ||||||||||||||||||||||||||||||
2023 Convertible Notes | 4.38 | % | 4.57 | % | 4/1/2023 | 1.5 years | 250,000 | 250,000 | ||||||||||||||||||||||||||||||
2025 Senior Notes | 4.75 | % | (3) | 5.04 | % | 3/15/2025 | 3.5 years | 500,000 | 500,000 | |||||||||||||||||||||||||||||
2026 Senior Notes | 3.63 | % | 3.77 | % | 7/15/2026 | 4.8 years | 400,000 | — | ||||||||||||||||||||||||||||||
Total principal amount | 1,750,000 | 1,750,000 | ||||||||||||||||||||||||||||||||||||
Unamortized discount—Convertible Notes | (690) | (2,559) | ||||||||||||||||||||||||||||||||||||
Unamortized discount—Senior Notes | (8,666) | (9,332) | ||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | (6,960) | (5,589) | ||||||||||||||||||||||||||||||||||||
Carrying amount of debt components | $ | 1,733,684 | $ | 1,732,520 | ||||||||||||||||||||||||||||||||||
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes | N/A | $ | 3,755 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | Remaining | | | | | | | |
| | Coupon | | | Effective | | Maturity | | Period of | | Carrying Value at | |||||
| | Rate | | | Rate (1) | | Date | | Amortization | | 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 |
36
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, 2020:2021 (amounts in thousands, except rates):
September 30, 2021 | |||||||||||
Conversion | Conversion | ||||||||||
Rate (1) | Price (2) | ||||||||||
2023 Convertible Notes | 38.5959 | $ | 25.91 |
| | | | | |
| | September 30, 2020 | |||
| | Conversion | | Conversion | |
| | Rate (1) | | Price (2) | |
2023 Convertible Notes | | 38.5959 |
| $ | 25.91 |
The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of 2023 Convertible Notes converted, as adjusted in accordance with the indenture governing the 2023 Convertible Notes (including the applicable supplemental indenture).
consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) certain other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.
Loan Securitizations
| | | | | | | | | | | | |
| | Commercial Loans | | Residential Loans | ||||||||
|
| Face Amount |
| Proceeds |
| Face Amount |
| Proceeds | ||||
For the Three Months Ended 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 Loans | Residential Loans | ||||||||||||||||||||||
Face Amount | Proceeds | Face Amount | Proceeds | ||||||||||||||||||||
For the Three Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 349,225 | $ | 364,287 | $ | 469,663 | $ | 491,901 | |||||||||||||||
2020 | 151,295 | 157,497 | 478,911 | 499,321 | |||||||||||||||||||
For the Nine Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 738,866 | $ | 775,374 | $ | 1,417,641 | $ | 1,465,576 | |||||||||||||||
2020 | 487,130 | 509,890 | 1,443,691 | 1,487,761 |
37
Loan Transfers Accounted for as Sales | |||||||||||||||||||||||
Commercial Loans | Residential Loans | ||||||||||||||||||||||
Face amount (1) | Proceeds (1) | Face Amount | Proceeds | ||||||||||||||||||||
For the Three Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 35,700 | $ | 35,356 | $ | — | $ | — | |||||||||||||||
2020 | — | — | — | — | |||||||||||||||||||
For the Nine Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 268,370 | $ | 264,846 | $ | 89,801 | $ | 92,817 | |||||||||||||||
2020 | 399,132 | 396,078 | 550 | 604 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | 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 |
During the nine months ended September 30, 2021, losses recognized by the Commercial and Residential Lending Segment on sales of commercial loans were $1.1 million. During the three months ended September 30, 2021, losses recognized by the Commercial and Residential Lending Segment on sales of commercial loans were not material. 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 0no sales of commercial loans during the three months ended September 30, 2020.
Infrastructure Loan Sales
recognizing immaterial gains. 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 0no sales of loans by the Infrastructure Lending Segment during the three months ended September 30, 2021 or 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
12. Derivatives and Hedging Activity
38
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;
Type of Derivative | Number of Contracts | Aggregate Notional Amount | Notional Currency | Maturity | ||||||||||||||||||||||
Fx contracts – Buy Euros ("EUR") | 17 | 52,389 | EUR | October 2021 - March 2023 | ||||||||||||||||||||||
Fx contracts – Buy Pounds Sterling ("GBP") | 13 | 9,935 | GBP | November 2021 - October 2024 | ||||||||||||||||||||||
Fx contracts – Sell EUR | 131 | 255,128 | EUR | October 2021 - November 2025 | ||||||||||||||||||||||
Fx contracts – Sell GBP | 131 | 534,811 | GBP | October 2021 - February 2025 | ||||||||||||||||||||||
Fx contracts – Sell Australian dollar ("AUD") | 51 | 259,803 | AUD | October 2021 - October 2024 | ||||||||||||||||||||||
Interest rate swaps – Paying fixed rates | 44 | 2,469,098 | USD | May 2023 - October 2031 | ||||||||||||||||||||||
Interest rate swaps – Receiving fixed rates | 2 | 473,200 | USD | March 2025 - October 2031 | ||||||||||||||||||||||
Interest rate caps | 20 | 939,893 | USD | November 2021 - April 2025 | ||||||||||||||||||||||
Interest rate caps | 1 | 61,000 | GBP | April 2024 | ||||||||||||||||||||||
Credit index instruments | 3 | 49,000 | USD | September 2058 - August 2061 | ||||||||||||||||||||||
Interest rate swap guarantees | 5 | 309,443 | USD | May 2022 - June 2025 | ||||||||||||||||||||||
Total | 418 |
| | | | | | | | |
Type of Derivative |
| Number of Contracts |
| Aggregate Notional Amount |
| Notional Currency |
| Maturity |
Fx contracts – Buy Euros ("EUR") | | 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 | | | | | | |
Fair Value of Derivatives in an Asset Position (1) as of | Fair Value of Derivatives in a Liability Position (2) as of | ||||||||||||||||||||||
September 30, 2021 | December 31, 2020 | September 30, 2021 | December 31, 2020 | ||||||||||||||||||||
Interest rate contracts | $ | 22,684 | $ | 33,841 | $ | 2,054 | $ | 4 | |||||||||||||||
Interest rate swap guarantees | — | — | 417 | 849 | |||||||||||||||||||
Foreign exchange contracts | 29,882 | 6,585 | 12,896 | 39,951 | |||||||||||||||||||
Credit index instruments | — | 129 | 248 | 520 | |||||||||||||||||||
Total derivatives | $ | 52,566 | $ | 40,555 | $ | 15,615 | $ | 41,324 |
| | | | | | | | | | | | |
| | Fair Value of Derivatives | | Fair Value of Derivatives | ||||||||
| | in an Asset Position (1) as of | | in a Liability Position (2) as of | ||||||||
| | 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 |
39
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income | Amount of Gain (Loss) Recognized in Income for the Three Months Ended September 30, | Amount of Gain (Loss) Recognized in Income for the Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
Interest rate contracts | Gain (loss) on derivative financial instruments | $ | 7,993 | $ | 259 | $ | 20,808 | $ | (52,129) | |||||||||||||||||||||||
Interest rate swap guarantees | Gain (loss) on derivative financial instruments | (65) | 260 | 431 | (345) | |||||||||||||||||||||||||||
Foreign exchange contracts | Gain (loss) on derivative financial instruments | 33,796 | (28,514) | 44,857 | 17,644 | |||||||||||||||||||||||||||
Credit index instruments | Gain (loss) on derivative financial instruments | 88 | (102) | (304) | 345 | |||||||||||||||||||||||||||
$ | 41,812 | $ | (28,097) | $ | 65,792 | $ | (34,485) |
| | | | | | | | | | | | | | |
| | | | 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 |
(ii) Gross Amounts Offset in the Statement of Financial Position | (iii) = (i) - (ii) Net Amounts Presented in the Statement of Financial Position | (iv) Gross Amounts Not Offset in the Statement of Financial Position | |||||||||||||||||||||||||||||||||
(i) Gross Amounts Recognized | Financial Instruments | Cash Collateral Received / Pledged | (v) = (iii) - (iv) Net Amount | ||||||||||||||||||||||||||||||||
As of September 30, 2021 | |||||||||||||||||||||||||||||||||||
Derivative assets | $ | 52,566 | $ | — | $ | 52,566 | $ | 12,912 | $ | 30,023 | $ | 9,631 | |||||||||||||||||||||||
Derivative liabilities | $ | 15,615 | $ | — | $ | 15,615 | $ | 12,912 | $ | 2,286 | $ | 417 | |||||||||||||||||||||||
Repurchase agreements | 8,004,910 | — | 8,004,910 | 8,004,910 | — | — | |||||||||||||||||||||||||||||
$ | 8,020,525 | $ | — | $ | 8,020,525 | $ | 8,017,822 | $ | 2,286 | $ | 417 | ||||||||||||||||||||||||
As of December 31, 2020 | |||||||||||||||||||||||||||||||||||
Derivative assets | $ | 40,555 | $ | — | $ | 40,555 | $ | 6,716 | $ | 33,772 | $ | 67 | |||||||||||||||||||||||
Derivative liabilities | $ | 41,324 | $ | — | $ | 41,324 | $ | 6,716 | $ | 27,416 | $ | 7,192 | |||||||||||||||||||||||
Repurchase agreements | 5,808,807 | — | 5,808,807 | 5,808,807 | — | — | |||||||||||||||||||||||||||||
$ | 5,850,131 | $ | — | $ | 5,850,131 | $ | 5,815,523 | $ | 27,416 | $ | 7,192 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | (iv) | | | | ||||
| | | | | | | | | | | Gross Amounts Not | | | | ||||
| | | | | | | | | | | Offset in the Statement | | | | ||||
| | | | | (ii) | | (iii) = (i) - (ii) | | of Financial Position | | | | ||||||
|
| | | | Gross Amounts |
| Net Amounts |
| | |
| Cash |
| | | |||
| | (i) | | Offset in the | | Presented in | | | | | Collateral | | | | ||||
| | Gross Amounts | | Statement of | | the Statement of | | Financial | | Received / | | (v) = (iii) - (iv) | ||||||
| | Recognized | | Financial Position | | Financial Position | | Instruments | | Pledged | | Net Amount | ||||||
As of 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 |
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 allocablea portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.
40
During the year ended December 31, 2019,
September 30, 2021 | December 31, 2020 | ||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 22,018 | $ | 96,998 | |||||||
Loans held-for-investment | 3,014,891 | 1,002,441 | |||||||||
Investment securities | 11,950 | — | |||||||||
Accrued interest receivable | 8,796 | 5,454 | |||||||||
Other assets | 66,003 | 557 | |||||||||
Total Assets | $ | 3,123,658 | $ | 1,105,450 | |||||||
Liabilities | |||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 5,501 | $ | 663 | |||||||
Collateralized loan obligations and single asset securitization, net | 2,614,230 | 930,554 | |||||||||
Total Liabilities | $ | 2,619,731 | $ | 931,217 |
| | | | | | |
| | 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 |
In December 2019, we entered into2021.
In addition to the above non-securitization entities, we have smaller VIEs with total assets of $97.3$102.0 million and liabilities of $53.8$53.5 million as of September 30, 2020.
2021.
41
As of September 30, 2020, 5 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, NaN of these 5 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, 2020,2021, 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.
Base Management Fee. For both the three months ended September 30, 20202021 and 2019,2020, approximately $19.2 million was incurred for base management fees. For the nine months ended September 30, 2021 and 2020, and 2019, approximately $57.4$57.5 million and $57.7$57.4 million, respectively, was incurred for base management fees. In April 2020, our board of directors authorized the payment of our first quarter base management fee of $19.1 million in 1,422,143 shares of our common stock. As of both September 30, 20202021 and December 31, 2019,2020, there were $19.2 million and $19.3 million, respectively, of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets.
Incentive Fee. For the three months ended September 30, 2021, approximately $1.0 million was incurred for incentive fees. There were no incentive fees incurred during the three months ended September 30, 2020 and $1.8 million were incurred during the three months ended September 30, 2019.2020. For the nine months ended September 30, 2021 and 2020, and 2019, approximately $15.8$19.1 million and $2.0$15.8 million, respectively, was incurred for incentive fees. As of September 30, 2021 and December 31, 2019,2020, there were $18.1$1.0 million and $15.0 million of unpaid incentive fees included in related-party payable in our condensed consolidated balance sheets. There were 0 unpaid incentive fees as of September 30, 2020.
42
Expense Reimbursement. For the three months ended September 30, 2021 and 2020, and 2019, approximately $1.5$1.8 million and $1.9$1.5 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, and 2019, approximately $5.2$4.8 million and $5.8$5.2 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of September 30, 20202021 and December 31, 2019, approximately $2.92020, there were $3.2 million and $3.5$5.0 million, respectively, of unpaid reimbursable executive compensation and other expenses were included in related-party payable in our condensed consolidated balance sheets.
Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the nine months ended September 30, 2021 and 2020, we granted 981,951 and 341,635 RSAs, respectively, at grant date fair values of $19.6 million and $3.9 million, respectively. There were no RSAs granted during the three months ended September 30, 20202021 or 2019.2020. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.1$2.2 million and $1.2$0.1 million during the three months ended September 30, 20202021 and 2019,2020, 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 such awards to employees of affiliates of our Manager were $2.5$6.7 million and $3.0$2.5 million during the nine months ended September 30, 20202021 and 2019,2020, respectively. These shares generally vest over a three-year period.
In January 2020, the Company co-originated a €70.3 million mezzanine loanNovember 2019 with SEREF, an affiliate of our Manager, tofor the third party that acquired our propertyacquisition of an office portfolio located in Ireland in December 2019. TheSpain. Financing for the released collateral was provided by the Company and the proceeds were used to partially repay €11.5 million of the existing loan, of which SEREF's portion was €5.7 million.
Estepona, Spain, was paid in full.
During the three and nine months ended September 30, 2020,2021, the Company acquired $57.6$395.3 million and $185.0$719.9 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Additionally, as of September 30, 2021, the Company had outstanding residential mortgage loan purchase commitments of $144.0 million to this residential mortgage originator. 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.
43
Lease Arrangements
In April 2020 we provided a $1.9 million cash security deposit to the landlord. During the three and nine months ended September 30, 2021, we made payments to the landlord of $3.0 million and $7.8 million, respectively, for reimbursements relating to tenant improvements under the terms of the lease.
respectively.
| | | | | | | | | | | |
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 |
Declaration Date | Record Date | Ex-Dividend Date | Payment Date | Amount | Frequency | |||||||||||||||||||||||||||
9/15/21 | 9/30/21 | 9/29/21 | 10/15/21 | $ | 0.48 | Quarterly | ||||||||||||||||||||||||||
6/14/21 | 6/30/21 | 6/29/21 | 7/15/21 | 0.48 | Quarterly | |||||||||||||||||||||||||||
3/11/21 | 3/31/21 | 3/30/21 | 4/15/21 | 0.48 | Quarterly |
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 1,925,421 shares of common stock for $28.8 million and 0 Convertible Notes under our repurchase program. As of September 30, 2020, we had $371.2 million of remaining capacity to repurchase common stock and/or Convertible Notes under the repurchase program.
44
Trust, Inc. Equity Plan (the “Equity Plan”) and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (the “Non-Executive Director Stock Plan”).
Grant Date | Type | Amount Granted | Grant Date Fair Value | Vesting Period | ||||||||||||||||||||||
November 2020 | RSU | 1,800,000 | $ | 30,078 | 3 years | |||||||||||||||||||||
September 2019 | RSU | 1,200,000 | 29,484 | (1) | ||||||||||||||||||||||
April 2018 | RSU | 775,000 | 16,329 | 3 years | ||||||||||||||||||||||
March 2017 | RSU | 1,000,000 | 22,240 | 3 years |
| | | | | | | | | | |
Grant Date |
| Type |
| Amount Granted |
| Grant Date Fair Value |
| Vesting Period |
| |
September 2019 | | RSU | | 1,200,000 | | $ | 29,484 | | (1) | |
April 2018 | | RSU | | 775,000 | | | 16,329 | | 3 years | |
March 2017 | | RSU | | 1,000,000 | | | 22,240 | | 3 years | |
Schedule of Non-Vested Shares and Share Equivalents
2017 Equity Plan | 2017 Manager Equity Plan | Total | Weighted Average Grant Date Fair Value (per share) | ||||||||||||||||||||
Balance as of January 1, 2021 | 1,594,605 | 2,286,896 | 3,881,501 | $ | 17.26 | ||||||||||||||||||
Granted | 1,677,654 | — | 1,677,654 | 22.09 | |||||||||||||||||||
Vested | (733,500) | (759,860) | (1,493,360) | 18.14 | |||||||||||||||||||
Forfeited | (36,568) | — | (36,568) | 19.79 | |||||||||||||||||||
Balance as of September 30, 2021 | 2,502,191 | 1,527,036 | 4,029,227 | 18.93 |
| | | | | | | | | |
| | | | 2017 | | | | Weighted Average | |
| | 2017 | | Manager | | | | Grant Date Fair | |
| | Equity Plan | | Equity Plan | | Total | | Value (per share) | |
Balance as of January 1, 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 |
45
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Basic Earnings | |||||||||||||||||||||||
Income attributable to STWD common stockholders | $ | 128,602 | $ | 151,834 | $ | 356,290 | $ | 224,721 | |||||||||||||||
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,635) | (1,721) | (5,351) | (3,422) | |||||||||||||||||||
Basic earnings | $ | 126,967 | $ | 150,113 | $ | 350,939 | $ | 221,299 | |||||||||||||||
Diluted Earnings | |||||||||||||||||||||||
Income attributable to STWD common stockholders | $ | 128,602 | $ | 151,834 | $ | 356,290 | $ | 224,721 | |||||||||||||||
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,635) | (1,721) | (5,351) | (3,422) | |||||||||||||||||||
Add: Interest expense on Convertible Notes | 2,901 | 3,055 | 8,717 | * | |||||||||||||||||||
Add: Undistributed earnings to participating shares | — | 663 | $ | — | — | ||||||||||||||||||
Less: Undistributed earnings reallocated to participating shares | — | (642) | $ | — | — | ||||||||||||||||||
Diluted earnings | $ | 129,868 | $ | 153,189 | $ | 359,656 | $ | 221,299 | |||||||||||||||
Number of Shares: | |||||||||||||||||||||||
Basic — Average shares outstanding | 285,676 | 282,596 | 284,577 | 281,686 | |||||||||||||||||||
Effect of dilutive securities — Convertible Notes | 9,649 | 9,649 | 9,649 | * | |||||||||||||||||||
Effect of dilutive securities — Contingently issuable shares | 19 | — | 19 | — | |||||||||||||||||||
Effect of dilutive securities — Unvested non-participating shares | 104 | 213 | 148 | 182 | |||||||||||||||||||
Diluted — Average shares outstanding | 295,448 | 292,458 | 294,393 | 281,868 | |||||||||||||||||||
Earnings Per Share Attributable to STWD Common Stockholders: | |||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.53 | $ | 1.23 | $ | 0.79 | |||||||||||||||
Diluted | $ | 0.44 | $ | 0.52 | $ | 1.22 | $ | 0.79 |
| | | | | | | | | | | | |
| | 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 |
*Our Convertible Notes were not dilutive for the nine months ended September 30, 2020.
46
| | | | | | | | | |
|
| 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 |
47
Cumulative Unrealized Gain (Loss) on Available-for- Sale Securities | Foreign Currency Translation | Total | |||||||||||||||
Three Months Ended September 30, 2021 | |||||||||||||||||
Balance at July 1, 2021 | $ | 41,310 | $ | — | $ | 41,310 | |||||||||||
OCI before reclassifications | (822) | — | (822) | ||||||||||||||
Amounts reclassified from AOCI | (2) | — | (2) | ||||||||||||||
Net period OCI | (824) | — | (824) | ||||||||||||||
Balance at September 30, 2021 | $ | 40,486 | $ | — | $ | 40,486 | |||||||||||
Three Months Ended September 30, 2020 | |||||||||||||||||
Balance at July 1, 2020 | $ | 42,930 | $ | (64) | $ | 42,866 | |||||||||||
OCI before reclassifications | (581) | — | (581) | ||||||||||||||
Amounts reclassified from AOCI | — | — | — | ||||||||||||||
Net period OCI | (581) | — | (581) | ||||||||||||||
Balance at September 30, 2020 | $ | 42,349 | $ | (64) | $ | 42,285 | |||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||
Balance at January 1, 2021 | $ | 44,057 | $ | (64) | $ | 43,993 | |||||||||||
OCI before reclassifications | (3,569) | — | (3,569) | ||||||||||||||
Amounts reclassified from AOCI | (2) | 64 | 62 | ||||||||||||||
Net period OCI | (3,571) | 64 | (3,507) | ||||||||||||||
Balance at September 30, 2021 | $ | 40,486 | $ | — | $ | 40,486 | |||||||||||
Nine Months Ended September 30, 2020 | |||||||||||||||||
Balance at January 1, 2020 | $ | 50,996 | $ | (64) | $ | 50,932 | |||||||||||
OCI before reclassifications | (8,647) | — | (8,647) | ||||||||||||||
Amounts reclassified from AOCI | — | — | — | ||||||||||||||
Net period OCI | (8,647) | — | (8,647) | ||||||||||||||
Balance at September 30, 2020 | $ | 42,349 | $ | (64) | $ | 42,285 |
Valuation Process
48
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.
49
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.
50
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.
SASB
Convertible Notes
September 30, 2021 | |||||||||||||||||||||||
Total | Level I | Level II | Level III | ||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Loans under fair value option | $ | 2,190,765 | $ | — | $ | 384,549 | $ | 1,806,216 | |||||||||||||||
RMBS | 148,583 | — | — | 148,583 | |||||||||||||||||||
CMBS | 23,503 | — | — | 23,503 | |||||||||||||||||||
Equity security | 12,067 | 12,067 | — | — | |||||||||||||||||||
Domestic servicing rights | 15,942 | — | — | 15,942 | |||||||||||||||||||
Derivative assets | 52,566 | — | 52,566 | — | |||||||||||||||||||
VIE assets | 62,346,480 | — | — | 62,346,480 | |||||||||||||||||||
Total | $ | 64,789,906 | $ | 12,067 | $ | 437,115 | $ | 64,340,724 | |||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Derivative liabilities | $ | 15,615 | $ | — | $ | 15,615 | $ | — | |||||||||||||||
VIE liabilities | 60,894,975 | — | 56,364,386 | 4,530,589 | |||||||||||||||||||
Total | $ | 60,910,590 | $ | — | $ | 56,380,001 | $ | 4,530,589 |
December 31, 2020 | |||||||||||||||||||||||
Total | Level I | Level II | Level III | ||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Loans under fair value option | $ | 1,022,979 | $ | — | $ | — | $ | 1,022,979 | |||||||||||||||
RMBS | 167,349 | — | — | 167,349 | |||||||||||||||||||
CMBS | 19,457 | — | — | 19,457 | |||||||||||||||||||
Equity security | 11,247 | 11,247 | — | — | |||||||||||||||||||
Domestic servicing rights | 13,202 | — | — | 13,202 | |||||||||||||||||||
Derivative assets | 40,555 | — | 40,555 | — | |||||||||||||||||||
VIE assets | 64,238,328 | — | — | 64,238,328 | |||||||||||||||||||
Total | $ | 65,513,117 | $ | 11,247 | $ | 40,555 | $ | 65,461,315 | |||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Derivative liabilities | $ | 41,324 | $ | — | $ | 41,324 | $ | — | |||||||||||||||
VIE liabilities | 62,776,371 | — | 60,756,495 | 2,019,876 | |||||||||||||||||||
Total | $ | 62,817,695 | $ | — | $ | 60,797,819 | $ | 2,019,876 |
| | | | | | | | | | | | |
| | 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, 20202021 and 20192020 (amounts in thousands):
Three Months Ended September 30, 2021 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
July 1, 2021 balance | $ | 767,821 | $ | 154,704 | $ | 18,965 | $ | 13,705 | $ | 63,493,796 | $ | (4,836,192) | $ | 59,612,799 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 31,727 | — | (790) | 2,237 | (1,601,734) | 580,581 | (987,979) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 2,584 | — | — | — | — | 2,584 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (824) | — | — | — | — | (824) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 1,783,772 | — | — | — | — | — | 1,783,772 | |||||||||||||||||||||||||||||||||||||
Sales | (856,187) | — | — | — | — | — | (856,187) | |||||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | (27,112) | (27,112) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (50,395) | (7,881) | (356) | — | — | (351) | (58,983) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | 4,414 | — | — | — | — | (112,562) | (108,148) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | (133,863) | — | — | — | — | 349,922 | 216,059 | |||||||||||||||||||||||||||||||||||||
Transfers within Level III | 258,927 | — | — | — | (258,927) | — | — | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 1,649,200 | (520,325) | 1,128,875 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs balance | — | — | 5,684 | — | (935,855) | 35,450 | (894,721) | |||||||||||||||||||||||||||||||||||||
September 30, 2021 balance | $ | 1,806,216 | $ | 148,583 | $ | 23,503 | $ | 15,942 | $ | 62,346,480 | $ | (4,530,589) | $ | 59,810,135 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2021: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 12,571 | $ | 2,582 | $ | 409 | $ | 2,237 | $ | (1,601,734) | $ | 580,581 | $ | (1,003,354) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (822) | $ | — | $ | — | $ | — | $ | — | $ | (822) |
| | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| Domestic |
| | |
| | |
| | | |
| | Loans at | | | | | | | | Servicing | | | | | VIE | | | | |||
Three Months Ended 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) |
Three Months Ended September 30, 2020 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
July 1, 2020 balance | $ | 894,613 | $ | 174,281 | $ | 21,891 | $ | 13,955 | $ | 64,175,387 | $ | (2,129,529) | $ | 63,150,598 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 61,384 | — | (56) | 634 | (202,560) | (30,577) | (171,175) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 2,633 | — | — | — | — | 2,633 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (581) | — | — | — | — | (581) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 1,013,158 | — | — | — | — | — | 1,013,158 | |||||||||||||||||||||||||||||||||||||
Sales | (656,818) | — | — | — | — | — | (656,818) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (43,257) | (6,063) | (213) | — | — | (329) | (49,862) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | — | — | — | — | — | (485,332) | (485,332) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | — | — | — | — | — | 322,888 | 322,888 | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 512,300 | — | 512,300 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs | — | — | 227 | — | (7,652) | 7,573 | 148 | |||||||||||||||||||||||||||||||||||||
September 30, 2020 balance | $ | 1,269,080 | $ | 170,270 | $ | 21,849 | $ | 14,589 | $ | 64,477,475 | $ | (2,315,306) | $ | 63,637,957 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 8,864 | $ | 2,633 | $ | (56) | $ | 634 | $ | (194,147) | $ | (30,577) | $ | (212,649) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (581) | $ | — | $ | — | $ | — | $ | — | $ | (581) |
| | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| Domestic |
| | |
| | |
| | | |
| | Loans at | | | | | | | | Servicing | | | | | VIE | | | | |||
Three Months Ended 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 |
Nine Months Ended September 30, 2021 Loans at
Fair ValueRMBS CMBS Domestic
Servicing
RightsVIE Assets VIE
LiabilitiesTotal January 1, 2021 balance $ 1,022,979 $ 167,349 $ 19,457 $ 13,202 $ 64,238,328 $ (2,019,876) $ 63,441,439 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 68,116 — (98) 2,740 (4,952,071) 647,555 (4,233,758) Net accretion — 7,800 — — — — 7,800 Included in OCI — (3,571) — — — — (3,571) Purchases / Originations 3,151,346 — — — — — 3,151,346 Sales (2,333,767) — — — — — (2,333,767) Issuances — — — — — (38,715) (38,715) Cash repayments / receipts (153,723) (22,995) (1,540) — — (2,889) (181,147) Transfers into Level III 4,413 — — — — (2,953,709) (2,949,296) Transfers out of Level III (384,549) — — — — 864,153 479,604 Transfers within Level III 431,401 — — — (431,401) — — Consolidation of VIEs — — — — 4,427,479 (1,062,558) 3,364,921 Deconsolidation of VIEs — — 5,684 — (935,855) 35,450 (894,721) September 30, 2021 balance $ 1,806,216 $ 148,583 $ 23,503 $ 15,942 $ 62,346,480 $ (4,530,589) $ 59,810,135 Included in earnings $ 13,234 $ 7,793 $ 1,102 $ 2,740 $ (4,952,071) $ 647,555 $ (4,279,647) Included in OCI $ — $ (3,563) $ — $ — $ — $ — $ (3,563)
Nine Months Ended September 30, 2020 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
January 1, 2020 balance | $ | 1,436,194 | $ | 189,576 | $ | 25,008 | $ | 16,917 | $ | 62,187,175 | $ | (2,537,392) | $ | 61,317,478 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 79,700 | — | 5,331 | (2,328) | (1,291,705) | 107,019 | (1,101,983) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 7,967 | — | — | — | — | 7,967 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (8,647) | — | — | — | — | (8,647) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 1,900,738 | — | — | — | — | — | 1,900,738 | |||||||||||||||||||||||||||||||||||||
Sales | (1,998,255) | — | (7,940) | — | — | — | (2,006,195) | |||||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | (24,376) | (24,376) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (149,297) | (18,626) | (777) | — | — | (9,589) | (178,289) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | — | — | — | — | — | (1,242,539) | (1,242,539) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | — | — | — | — | — | 1,455,093 | 1,455,093 | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 3,589,657 | (71,095) | 3,518,562 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs | — | — | 227 | — | (7,652) | 7,573 | 148 | |||||||||||||||||||||||||||||||||||||
September 30, 2020 balance | $ | 1,269,080 | $ | 170,270 | $ | 21,849 | $ | 14,589 | $ | 64,477,475 | $ | (2,315,306) | $ | 63,637,957 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 8,551 | $ | 7,967 | $ | (1,055) | $ | (2,328) | $ | (1,213,498) | $ | 107,019 | $ | (1,093,344) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (8,647) | $ | — | $ | — | $ | — | $ | — | $ | (8,647) |
| | | | | | | | | | | | |
| | 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 |
54
September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
Financial assets not carried at fair value: | |||||||||||||||||||||||
Loans held-for-investment and loans held-for-sale | $ | 13,285,752 | $ | 13,355,441 | $ | 11,116,929 | $ | 11,107,316 | |||||||||||||||
HTM debt securities | 486,734 | 467,157 | 538,605 | 515,253 | |||||||||||||||||||
Financial liabilities not carried at fair value: | |||||||||||||||||||||||
Secured financing agreements, CLOs and SASB | $ | 14,116,282 | $ | 14,220,699 | $ | 11,076,744 | $ | 11,108,364 | |||||||||||||||
Unsecured senior notes | 1,733,684 | 1,805,826 | 1,732,520 | 1,786,667 |
The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):
| | | | | | | | | | | |
| | Carrying Value at | | Valuation | | Unobservable | | Range (Weighted Average) as of (1) | |||
|
| 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 |
Carrying Value at September 30, 2021 | Technique | Unobservable Input | Range (Weighted Average) as of (1) | ||||||||||||||||||||||||||
September 30, | December 31, 2020 | ||||||||||||||||||||||||||||
Loans under fair value option | $ | 1,806,216 | Discounted cash flow, market pricing | Coupon (d) | 3.3% - 6.1% (4.4%) | 3.3% - 9.7% (5.9%) | |||||||||||||||||||||||
Remaining contractual term (d) | 5.0 - 39.9 years - (29.0 years) | 7.3 - 39.3 years (26.3 years) | |||||||||||||||||||||||||||
FICO score (a) | 582 - 823 (746) | 519 - 823 (727) | |||||||||||||||||||||||||||
LTV (b) | 7% - 94% (67%) | 5% - 94% (68%) | |||||||||||||||||||||||||||
Purchase price (d) | 80.0% - 106.8% (99.4%) | 84.4% - 104.8% (99.8%) | |||||||||||||||||||||||||||
RMBS | 148,583 | Discounted cash flow | Constant prepayment rate (a) | 4.1% - 17.3% (8.8%) | 3.6% - 19.4% (7.6%) | ||||||||||||||||||||||||
Constant default rate (b) | 0.5% - 5.2% (2.2%) | 0.7% - 5.4% (2.4%) | |||||||||||||||||||||||||||
Loss severity (b) | 0% - 83% (11%) (f) | 0% - 85% (20%) (f) | |||||||||||||||||||||||||||
Delinquency rate (c) | 7% - 35% (19%) | 10% - 32% (19%) | |||||||||||||||||||||||||||
Servicer advances (a) | 21% - 83% (52%) | 23% - 82% (54%) | |||||||||||||||||||||||||||
Annual coupon deterioration (b) | 0% - 1.5% (0.1%) | 0% - 0.9% (0.1%) | |||||||||||||||||||||||||||
Putback amount per projected total collateral loss (e) | 0% - 8% (0.4%) | 0% - 17% (0.8%) | |||||||||||||||||||||||||||
CMBS | 23,503 | Discounted cash flow | Yield (b) | 0% - 301.3% (8.5%) | 0% - 536.6% (7.1%) | ||||||||||||||||||||||||
Duration (c) | 0 - 8.0 years (5.3 years) | 0 - 7.6 years (5.3 years) | |||||||||||||||||||||||||||
Domestic servicing rights | 15,942 | Discounted cash flow | Debt yield (a) | 7.25% (7.25%) | 7.50% (7.50%) | ||||||||||||||||||||||||
Discount rate (b) | 15% (15%) | 15% (15%) | |||||||||||||||||||||||||||
VIE assets | 62,346,480 | Discounted cash flow | Yield (b) | 0% - 340.7% (12.1%) | 0% - 312.2% (14.3%) | ||||||||||||||||||||||||
Duration (c) | 0 - 19.1 years (3.3 years) | 0 - 16.3 years (3.8 years) | |||||||||||||||||||||||||||
VIE liabilities | 4,530,589 | Discounted cash flow | Yield (b) | 0% - 340.7% (6.3%) | 0% - 312.2% (14.4%) | ||||||||||||||||||||||||
Duration (c) | 0 - 13.4 years (2.6 years) | 0 - 10.8 years (3.8 years) |
Unobservable inputs were weighted by the relative carrying value of the instruments as of September 30, 2021 and December 31, 2020.
(a)Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement. (b)Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement. (c)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question. (d)This unobservable input is not subject to variability as of the respective reporting dates. (e)Any delay in the putback recovery date leads to a decrease in fair value for the majority of securities in our RMBS portfolio. 55 (f)9% and 23% of the portfolio falls within a range of 45% - 80% as of September 30, 2021 and December 31, 2020, respectively. |
20. Income Taxes
55
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, 20202021 and 20192020 (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.
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||
Federal statutory tax rate | $ | 31,078 | 21.0 | % | $ | 37,711 | 21.0 | % | $ | 83,113 | 21.0 | % | $ | 54,231 | 21.0 | % | |||||||||||||||||||||||||||||||
REIT and other non-taxable loss | (24,527) | (16.6) | % | (24,688) | (13.7) | % | (73,046) | (18.5) | % | (41,697) | (16.2) | % | |||||||||||||||||||||||||||||||||||
State income taxes | 2,153 | 1.5 | % | 4,278 | 2.4 | % | 3,308 | 0.8 | % | 4,118 | 1.6 | % | |||||||||||||||||||||||||||||||||||
Federal benefit of state tax deduction | (452) | (0.3) | % | (899) | (0.5) | % | (695) | (0.2) | % | (865) | (0.3) | % | |||||||||||||||||||||||||||||||||||
Net operating loss carryback rate differential | — | — | % | (1,569) | (0.9) | % | — | — | % | (5,286) | (2.0) | % | |||||||||||||||||||||||||||||||||||
Intra-entity transfers | (312) | (0.2) | % | — | — | % | (6,364) | (1.5) | % | (3,781) | (1.5) | % | |||||||||||||||||||||||||||||||||||
Other | (439) | (0.3) | % | 10 | — | % | 62 | — | % | 96 | — | % | |||||||||||||||||||||||||||||||||||
Effective tax rate | $ | 7,501 | 5.1 | % | $ | 14,843 | 8.3 | % | $ | 6,378 | 1.6 | % | $ | 6,816 | 2.6 | % |
Additionally, as of September 30, 2021, our Commercial and Residential Lending Segment had outstanding residential loan purchase commitments of $877.7 million.
56
In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis.
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 179,486 | $ | 21,566 | $ | — | $ | 2,200 | $ | — | $ | 203,252 | $ | — | $ | 203,252 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 16,043 | 540 | — | 25,140 | — | 41,723 | (31,026) | 10,697 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 99 | — | — | 15,447 | — | 15,546 | (5,073) | 10,473 | |||||||||||||||||||||||||||||||||||||||
Rental income | 1,358 | — | 66,673 | 9,481 | — | 77,512 | — | 77,512 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 59 | 66 | 54 | 173 | — | 352 | — | 352 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 197,045 | 22,172 | 66,727 | 52,441 | — | 338,385 | (36,099) | 302,286 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 286 | — | — | (1,239) | 24,680 | 23,727 | — | 23,727 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 52,066 | 9,381 | 17,002 | 5,652 | 31,651 | 115,752 | (221) | 115,531 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 9,178 | 3,307 | 913 | 21,022 | 4,372 | 38,792 | 72 | 38,864 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 158 | — | — | 56 | — | 214 | — | 214 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 438 | — | 26,634 | 4,444 | — | 31,516 | — | 31,516 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 312 | 101 | 17,882 | 3,746 | — | 22,041 | — | 22,041 | |||||||||||||||||||||||||||||||||||||||
Credit loss provision (reversal), net | 19 | (582) | — | — | — | (563) | — | (563) | |||||||||||||||||||||||||||||||||||||||
Other expense | — | — | — | 23 | — | 23 | — | 23 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 62,457 | 12,207 | 62,431 | 33,704 | 60,703 | 231,502 | (149) | 231,353 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 28,049 | 28,049 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | (410) | — | (410) | 2,647 | 2,237 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | (8,682) | — | — | 2,870 | — | (5,812) | 5,513 | (299) | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 22,464 | — | — | 9,263 | — | 31,727 | — | 31,727 | |||||||||||||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 1,666 | 399 | — | 153 | — | 2,218 | (176) | 2,042 | |||||||||||||||||||||||||||||||||||||||
Loss on sale of investments and other assets, net | (47) | — | — | — | — | (47) | — | (47) | |||||||||||||||||||||||||||||||||||||||
Gain (loss) on derivative financial instruments, net | 38,016 | 87 | (318) | 3,992 | 35 | 41,812 | — | 41,812 | |||||||||||||||||||||||||||||||||||||||
Foreign currency (loss) gain, net | (26,820) | (168) | (16) | 1 | — | (27,003) | — | (27,003) | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | (18) | — | — | (481) | (499) | — | (499) | |||||||||||||||||||||||||||||||||||||||
Other loss, net | (964) | — | — | — | — | (964) | — | (964) | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 25,633 | 300 | (334) | 15,869 | (446) | 41,022 | 36,033 | 77,055 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 160,221 | 10,265 | 3,962 | 34,606 | (61,149) | 147,905 | 83 | 147,988 | |||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit | (5,652) | 488 | — | (2,337) | — | (7,501) | — | (7,501) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 154,569 | 10,753 | 3,962 | 32,269 | (61,149) | 140,404 | 83 | 140,487 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (3) | — | (4,691) | (7,108) | — | (11,802) | (83) | (11,885) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 154,566 | $ | 10,753 | $ | (729) | $ | 25,161 | $ | (61,149) | $ | 128,602 | $ | — | $ | 128,602 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 |
57
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 149,972 | $ | 17,835 | $ | — | $ | 1,597 | $ | — | $ | 169,404 | $ | — | $ | 169,404 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 21,385 | 635 | — | 23,587 | — | 45,607 | (33,421) | 12,186 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 110 | — | — | 13,749 | — | 13,859 | (4,311) | 9,548 | |||||||||||||||||||||||||||||||||||||||
Rental income | 2,014 | — | 63,925 | 10,039 | — | 75,978 | — | 75,978 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 66 | 101 | 48 | 98 | — | 313 | (2) | 311 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 173,547 | 18,571 | 63,973 | 49,070 | — | 305,161 | (37,734) | 267,427 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 297 | — | — | 221 | 22,596 | 23,114 | 13 | 23,127 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 38,422 | 8,914 | 16,180 | 5,425 | 27,040 | 95,981 | — | 95,981 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 12,483 | 3,568 | 1,094 | 18,813 | 3,436 | 39,394 | 84 | 39,478 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 757 | 62 | — | 65 | — | 884 | — | 884 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 643 | — | 24,302 | 4,577 | — | 29,522 | — | 29,522 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 430 | 87 | 19,130 | 3,934 | — | 23,581 | — | 23,581 | |||||||||||||||||||||||||||||||||||||||
Credit loss provision (reversal), net | 782 | (4,369) | — | — | — | (3,587) | — | (3,587) | |||||||||||||||||||||||||||||||||||||||
Other expense | 77 | — | 95 | — | — | 172 | — | 172 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 53,891 | 8,262 | 60,801 | 33,035 | 53,072 | 209,061 | 97 | 209,158 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 58,585 | 58,585 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | 3,960 | — | 3,960 | (3,326) | 634 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | 13,611 | — | — | 3,249 | — | 16,860 | (17,059) | (199) | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 59,402 | — | — | 1,982 | — | 61,384 | — | 61,384 | |||||||||||||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 3,253 | (80) | — | 358 | — | 3,531 | (339) | 3,192 | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on derivative financial instruments, net | (28,577) | 110 | (313) | 38 | 645 | (28,097) | — | (28,097) | |||||||||||||||||||||||||||||||||||||||
Foreign currency gain, net | 25,302 | 110 | 14 | 26 | — | 25,452 | — | 25,452 | |||||||||||||||||||||||||||||||||||||||
Other (loss) income, net | — | — | (1) | 358 | — | 357 | — | 357 | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 72,991 | 140 | (300) | 9,971 | 645 | 83,447 | 37,861 | 121,308 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 192,647 | 10,449 | 2,872 | 26,006 | (52,427) | 179,547 | 30 | 179,577 | |||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit | (16,700) | (86) | — | 1,943 | — | (14,843) | — | (14,843) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 175,947 | 10,363 | 2,872 | 27,949 | (52,427) | 164,704 | 30 | 164,734 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (3) | — | (5,072) | (7,795) | — | (12,870) | (30) | (12,900) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 175,944 | $ | 10,363 | $ | (2,200) | $ | 20,154 | $ | (52,427) | $ | 151,834 | $ | — | $ | 151,834 |
The table below presents our results of operations for the threenine months ended September 30, 20192021 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 |
58
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 515,776 | $ | 61,545 | $ | — | $ | 5,778 | $ | — | $ | 583,099 | $ | — | $ | 583,099 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 51,618 | 1,659 | — | 71,748 | — | 125,025 | (92,070) | 32,955 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 333 | — | — | 44,268 | — | 44,601 | (14,862) | 29,739 | |||||||||||||||||||||||||||||||||||||||
Rental income | 4,116 | — | 197,187 | 29,666 | — | 230,969 | — | 230,969 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 223 | 228 | 138 | 3,032 | — | 3,621 | — | 3,621 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 572,066 | 63,432 | 197,325 | 154,492 | — | 987,315 | (106,932) | 880,383 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 901 | — | — | (793) | 91,584 | 91,692 | 21 | 91,713 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 144,717 | 27,916 | 49,697 | 16,890 | 89,970 | 329,190 | (632) | 328,558 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 30,922 | 10,281 | 2,964 | 65,182 | 13,172 | 122,521 | 244 | 122,765 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 522 | 249 | — | 35 | — | 806 | — | 806 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 1,348 | — | 76,516 | 13,128 | — | 90,992 | — | 90,992 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 930 | 301 | 53,883 | 11,878 | — | 66,992 | — | 66,992 | |||||||||||||||||||||||||||||||||||||||
Credit loss (reversal) provision, net | (12,957) | 594 | — | — | — | (12,363) | — | (12,363) | |||||||||||||||||||||||||||||||||||||||
Other expense | 31 | — | 583 | 94 | — | 708 | — | 708 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 166,414 | 39,341 | 183,643 | 106,414 | 194,726 | 690,538 | (367) | 690,171 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 80,303 | 80,303 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | 795 | — | 795 | 1,945 | 2,740 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | (20,134) | — | — | (2,545) | — | (22,679) | 23,582 | 903 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 24,079 | — | — | 44,037 | — | 68,116 | — | 68,116 | |||||||||||||||||||||||||||||||||||||||
Earnings from unconsolidated entities | 5,415 | 75 | — | 235 | — | 5,725 | 277 | 6,002 | |||||||||||||||||||||||||||||||||||||||
Gain on sale of investments and other assets, net | 16,627 | 27 | — | 9,723 | — | 26,377 | — | 26,377 | |||||||||||||||||||||||||||||||||||||||
Gain (loss) on derivative financial instruments, net | 59,212 | 883 | 4,034 | 7,544 | (5,881) | 65,792 | — | 65,792 | |||||||||||||||||||||||||||||||||||||||
Foreign currency loss, net | (35,699) | (279) | (16) | (63) | — | (36,057) | — | (36,057) | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (289) | (1,264) | (141) | (22) | (481) | (2,197) | — | (2,197) | |||||||||||||||||||||||||||||||||||||||
Other (loss) income, net | (6,468) | 23 | — | 29 | — | (6,416) | — | (6,416) | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 42,743 | (535) | 3,877 | 59,733 | (6,362) | 99,456 | 106,107 | 205,563 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 448,395 | 23,556 | 17,559 | 107,811 | (201,088) | 396,233 | (458) | 395,775 | |||||||||||||||||||||||||||||||||||||||
Income tax benefit (provision) | 886 | 338 | — | (7,602) | — | (6,378) | — | (6,378) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 449,281 | 23,894 | 17,559 | 100,209 | (201,088) | 389,855 | (458) | 389,397 | |||||||||||||||||||||||||||||||||||||||
Net (income) loss attributable to non-controlling interests | (10) | — | (14,682) | (18,873) | — | (33,565) | 458 | (33,107) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 449,271 | $ | 23,894 | $ | 2,877 | $ | 81,336 | $ | (201,088) | $ | 356,290 | $ | — | $ | 356,290 |
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 |
59
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 492,489 | $ | 59,374 | $ | — | $ | 6,071 | $ | — | $ | 557,934 | $ | — | $ | 557,934 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 57,358 | 2,019 | — | 73,311 | — | 132,688 | (90,618) | 42,070 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 424 | — | — | 28,782 | — | 29,206 | (8,207) | 20,999 | |||||||||||||||||||||||||||||||||||||||
Rental income | 2,782 | — | 191,452 | 28,600 | — | 222,834 | — | 222,834 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 298 | 344 | 228 | 891 | — | 1,761 | (5) | 1,756 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 553,351 | 61,737 | 191,680 | 137,655 | — | 944,423 | (98,830) | 845,593 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 987 | — | — | 680 | 85,257 | 86,924 | 46 | 86,970 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 134,243 | 31,709 | 49,243 | 18,796 | 83,670 | 317,661 | (162) | 317,499 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 29,230 | 12,328 | 3,453 | 54,490 | 11,105 | 110,606 | 251 | 110,857 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 2,195 | 1,179 | 12 | (3) | — | 3,383 | — | 3,383 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 2,409 | — | 71,857 | 13,102 | — | 87,368 | — | 87,368 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,275 | 246 | 57,571 | 11,890 | — | 70,982 | — | 70,982 | |||||||||||||||||||||||||||||||||||||||
Credit loss provision, net | 52,293 | 2,991 | — | — | — | 55,284 | — | 55,284 | |||||||||||||||||||||||||||||||||||||||
Other expense | 230 | — | 432 | — | — | 662 | — | 662 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 222,862 | 48,453 | 182,568 | 98,955 | 180,032 | 732,870 | 135 | 733,005 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 64,353 | 64,353 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | 9,606 | — | 9,606 | (11,934) | (2,328) | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | (8,814) | — | — | (36,026) | — | (44,840) | 47,972 | 3,132 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 56,895 | — | — | 22,805 | — | 79,700 | — | 79,700 | |||||||||||||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 3,975 | (1,198) | — | 30,504 | — | 33,281 | (1,216) | 32,065 | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on sale of investments and other assets, net | (961) | 296 | — | 7,433 | — | 6,768 | — | 6,768 | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on derivative financial instruments, net | (9,508) | (1,328) | (35,150) | (22,896) | 34,397 | (34,485) | — | (34,485) | |||||||||||||||||||||||||||||||||||||||
Foreign currency (loss) gain, net | (1,757) | (53) | (53) | 2 | — | (1,861) | — | (1,861) | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (22) | (170) | (2,185) | — | — | (2,377) | — | (2,377) | |||||||||||||||||||||||||||||||||||||||
Other income, net | — | — | 240 | 447 | — | 687 | — | 687 | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 39,808 | (2,453) | (37,148) | 11,875 | 34,397 | 46,479 | 99,175 | 145,654 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 370,297 | 10,831 | (28,036) | 50,575 | (145,635) | 258,032 | 210 | 258,242 | |||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit | (15,535) | 3 | — | 8,716 | — | (6,816) | — | (6,816) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 354,762 | 10,834 | (28,036) | 59,291 | (145,635) | 251,216 | 210 | 251,426 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (10) | — | (15,294) | (11,191) | — | (26,495) | (210) | (26,705) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 354,752 | $ | 10,834 | $ | (43,330) | $ | 48,100 | $ | (145,635) | $ | 224,721 | $ | — | $ | 224,721 |
The table below presents our 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 |
60
The table below presents our condensed consolidated balance sheet as of September 30, 20202021 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 |
61
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 19,626 | $ | 16,695 | $ | 32,162 | $ | 29,027 | $ | 175,197 | $ | 272,707 | $ | 609 | $ | 273,316 | |||||||||||||||||||||||||||||||
Restricted cash | 60,183 | 23,628 | 6,807 | 19,854 | — | 110,472 | — | 110,472 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-investment, net | 11,603,370 | 1,688,847 | — | 781 | — | 13,292,998 | — | 13,292,998 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-sale | 1,813,458 | 84,253 | — | 285,808 | — | 2,183,519 | — | 2,183,519 | |||||||||||||||||||||||||||||||||||||||
Investment securities | 927,411 | 33,323 | — | 1,128,921 | — | 2,089,655 | (1,418,768) | 670,887 | |||||||||||||||||||||||||||||||||||||||
Properties, net | 124,691 | — | 1,928,853 | 175,318 | — | 2,228,862 | — | 2,228,862 | |||||||||||||||||||||||||||||||||||||||
Intangible assets | — | — | 35,958 | 68,596 | — | 104,554 | (39,432) | 65,122 | |||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated entities | 45,129 | 25,170 | — | 38,239 | — | 108,538 | (14,538) | 94,000 | |||||||||||||||||||||||||||||||||||||||
Goodwill | — | 119,409 | — | 140,437 | — | 259,846 | — | 259,846 | |||||||||||||||||||||||||||||||||||||||
Derivative assets | 31,835 | 36 | 96 | 78 | 20,521 | 52,566 | — | 52,566 | |||||||||||||||||||||||||||||||||||||||
Accrued interest receivable | 101,539 | 4,372 | — | 1,887 | 447 | 108,245 | (119) | 108,126 | |||||||||||||||||||||||||||||||||||||||
Other assets | 159,296 | 4,186 | 77,928 | 34,054 | 19,298 | 294,762 | (92) | 294,670 | |||||||||||||||||||||||||||||||||||||||
VIE assets, at fair value | — | — | — | — | — | — | 62,346,480 | 62,346,480 | |||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 14,886,538 | $ | 1,999,919 | $ | 2,081,804 | $ | 1,923,000 | $ | 215,463 | $ | 21,106,724 | $ | 60,874,140 | $ | 81,980,864 | |||||||||||||||||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 55,572 | $ | 10,064 | $ | 48,663 | $ | 44,405 | $ | 51,321 | $ | 210,025 | $ | 55 | $ | 210,080 | |||||||||||||||||||||||||||||||
Related-party payable | — | — | — | — | 23,378 | 23,378 | — | 23,378 | |||||||||||||||||||||||||||||||||||||||
Dividends payable | — | — | — | — | 139,738 | 139,738 | — | 139,738 | |||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 14,924 | 419 | — | 272 | — | 15,615 | — | 15,615 | |||||||||||||||||||||||||||||||||||||||
Secured financing agreements, net | 7,206,946 | 905,343 | 1,873,053 | 763,555 | 774,812 | 11,523,709 | (21,657) | 11,502,052 | |||||||||||||||||||||||||||||||||||||||
Collateralized loan obligations and single asset securitization, net | 2,209,270 | 404,960 | — | — | — | 2,614,230 | — | 2,614,230 | |||||||||||||||||||||||||||||||||||||||
Unsecured senior notes, net | — | — | — | — | 1,733,684 | 1,733,684 | — | 1,733,684 | |||||||||||||||||||||||||||||||||||||||
VIE liabilities, at fair value | — | — | — | — | — | — | 60,894,975 | 60,894,975 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities | 9,486,712 | 1,320,786 | 1,921,716 | 808,232 | 2,722,933 | 16,260,379 | 60,873,373 | 77,133,752 | |||||||||||||||||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Starwood Property Trust, Inc. Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock | — | — | — | — | 2,961 | 2,961 | — | 2,961 | |||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 929,932 | 636,911 | 17,137 | (377,386) | 4,063,671 | 5,270,265 | — | 5,270,265 | |||||||||||||||||||||||||||||||||||||||
Treasury stock | — | — | — | — | (138,022) | (138,022) | — | (138,022) | |||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income | 40,486 | — | — | — | — | 40,486 | — | 40,486 | |||||||||||||||||||||||||||||||||||||||
Retained earnings (accumulated deficit) | 4,429,290 | 42,222 | (65,568) | 1,342,156 | (6,436,080) | (687,980) | — | (687,980) | |||||||||||||||||||||||||||||||||||||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 5,399,708 | 679,133 | (48,431) | 964,770 | (2,507,470) | 4,487,710 | — | 4,487,710 | |||||||||||||||||||||||||||||||||||||||
Non-controlling interests in consolidated subsidiaries | 118 | — | 208,519 | 149,998 | — | 358,635 | 767 | 359,402 | |||||||||||||||||||||||||||||||||||||||
Total Equity | 5,399,826 | 679,133 | 160,088 | 1,114,768 | (2,507,470) | 4,846,345 | 767 | 4,847,112 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities and Equity | $ | 14,886,538 | $ | 1,999,919 | $ | 2,081,804 | $ | 1,923,000 | $ | 215,463 | $ | 21,106,724 | $ | 60,874,140 | $ | 81,980,864 |
The table below presents our condensed consolidated balance sheet as of December 31, 20192020 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 |
62
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 160,007 | $ | 4,440 | $ | 32,080 | $ | 19,546 | $ | 346,372 | $ | 562,445 | $ | 772 | $ | 563,217 | |||||||||||||||||||||||||||||||
Restricted cash | 93,445 | 45,113 | 7,192 | 13,195 | — | 158,945 | — | 158,945 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-investment, net | 9,673,625 | 1,412,440 | — | 1,008 | — | 11,087,073 | — | 11,087,073 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-sale | 841,963 | 120,540 | — | 90,332 | — | 1,052,835 | — | 1,052,835 | |||||||||||||||||||||||||||||||||||||||
Investment securities | 1,014,402 | 35,681 | — | 1,112,145 | — | 2,162,228 | (1,425,570) | 736,658 | |||||||||||||||||||||||||||||||||||||||
Properties, net | 103,896 | — | 1,969,414 | 197,843 | — | 2,271,153 | — | 2,271,153 | |||||||||||||||||||||||||||||||||||||||
Intangible assets | — | — | 40,370 | 71,123 | — | 111,493 | (41,376) | 70,117 | |||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated entities | 54,407 | 25,095 | — | 44,664 | — | 124,166 | (16,112) | 108,054 | |||||||||||||||||||||||||||||||||||||||
Goodwill | — | 119,409 | — | 140,437 | — | 259,846 | — | 259,846 | |||||||||||||||||||||||||||||||||||||||
Derivative assets | 6,595 | — | 41 | 147 | 33,772 | 40,555 | — | 40,555 | |||||||||||||||||||||||||||||||||||||||
Accrued interest receivable | 87,922 | 2,091 | — | 123 | 5,978 | 96,114 | (134) | 95,980 | |||||||||||||||||||||||||||||||||||||||
Other assets | 61,638 | 4,531 | 69,859 | 44,579 | 10,148 | 190,755 | (7) | 190,748 | |||||||||||||||||||||||||||||||||||||||
VIE assets, at fair value | — | — | — | — | — | — | 64,238,328 | 64,238,328 | |||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 12,097,900 | $ | 1,769,340 | $ | 2,118,956 | $ | 1,735,142 | $ | 396,270 | $ | 18,117,608 | $ | 62,755,901 | $ | 80,873,509 | |||||||||||||||||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 41,104 | $ | 12,144 | $ | 43,630 | $ | 45,309 | $ | 64,583 | $ | 206,770 | $ | 75 | $ | 206,845 | |||||||||||||||||||||||||||||||
Related-party payable | — | — | — | 5 | 39,165 | 39,170 | — | 39,170 | |||||||||||||||||||||||||||||||||||||||
Dividends payable | — | — | — | — | 137,959 | 137,959 | — | 137,959 | |||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 39,082 | 1,718 | — | 524 | — | 41,324 | — | 41,324 | |||||||||||||||||||||||||||||||||||||||
Secured financing agreements, net | 5,893,999 | 1,240,763 | 1,794,609 | 606,100 | 632,719 | 10,168,190 | (22,000) | 10,146,190 | |||||||||||||||||||||||||||||||||||||||
Collateralized loan obligations, net | 930,554 | — | — | — | — | 930,554 | — | 930,554 | |||||||||||||||||||||||||||||||||||||||
Unsecured senior notes, net | — | — | — | — | 1,732,520 | 1,732,520 | — | 1,732,520 | |||||||||||||||||||||||||||||||||||||||
VIE liabilities, at fair value | — | — | — | — | — | — | 62,776,371 | 62,776,371 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities | 6,904,739 | 1,254,625 | 1,838,239 | 651,938 | 2,606,946 | 13,256,487 | 62,754,446 | 76,010,933 | |||||||||||||||||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Starwood Property Trust, Inc. Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock | — | — | — | — | 2,921 | 2,921 | — | 2,921 | |||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 1,192,584 | 496,387 | 98,882 | (322,992) | 3,744,878 | 5,209,739 | — | 5,209,739 | |||||||||||||||||||||||||||||||||||||||
Treasury stock | — | — | — | — | (138,022) | (138,022) | — | (138,022) | |||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | 44,057 | — | — | (64) | — | 43,993 | — | 43,993 | |||||||||||||||||||||||||||||||||||||||
Retained earnings (accumulated deficit) | 3,956,405 | 18,328 | (44,832) | 1,260,819 | (5,820,453) | (629,733) | — | (629,733) | |||||||||||||||||||||||||||||||||||||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 5,193,046 | 514,715 | 54,050 | 937,763 | (2,210,676) | 4,488,898 | — | 4,488,898 | |||||||||||||||||||||||||||||||||||||||
Non-controlling interests in consolidated subsidiaries | 115 | — | 226,667 | 145,441 | — | 372,223 | 1,455 | 373,678 | |||||||||||||||||||||||||||||||||||||||
Total Equity | 5,193,161 | 514,715 | 280,717 | 1,083,204 | (2,210,676) | 4,861,121 | 1,455 | 4,862,576 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities and Equity | $ | 12,097,900 | $ | 1,769,340 | $ | 2,118,956 | $ | 1,735,142 | $ | 396,270 | $ | 18,117,608 | $ | 62,755,901 | $ | 80,873,509 |
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.Woodstar I Portfolio. The Term Loan increaseloan carries a six-yeartwo-year term, with 3 one-year extension options, and has an annual interest rate of LIBOR + 3.50%2.11%. TheA portion of the net proceeds werewas used to redeemrepay $217.1 million of outstanding mortgage loans on those properties with 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 term which may reset annually with the lender’s consent and anweighted average annual interest rate of one-month LIBOR + 2.302.71%.
Commercial Mortgage Loan Securitization
In October 2020, we received proceeds of $253.0 million from the securitization of $231.8 million of commercial loans.
63
Item 2. Management’s Discussion and AnalysisAnalysis of Financial Condition and Results of Operations
Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.
Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.
Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.
Refer to Note 1 of our condensed consolidated financial statements included herein (the “Condensed Consolidated Financial Statements”) for further discussion of our business and organization.
64
COVID-19 Pandemic
During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, which has spread to over 200 countries and territories, including the United States, has spread to every state in the United States, 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 disruptions 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 outbreak of COVID-19 and its impact on the current financial, economic and capital markets environment, and future developments in these and other areas, present uncertainty and risk with respect to our financial condition, results of operations, liquidity, and ability to pay distributions. We expect that these impacts are likely to continue to some extent as the outbreak persists and potentially even longer. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and the performance of our investments.
Further discussion of the potential impacts on our business, financial condition, results of operations, liquidity, the market price of our common stock and our ability to make distributions to our stockholders from the COVID-19 pandemic is provided in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Asset Performance and Collections
We maintain an in-house team of asset management professionals who oversee our commercial loans and are in regular communication with these borrowers. We have utilized these relationships to address the potential impacts of the COVID-19 pandemic to the assets which secure our loans, particularly hospitality assets. Some of our borrowers have indicated that dueas to the impact of COVID-19, including related variants, on the COVID-19 pandemic, they will be unable to timely execute their business plans, have had to temporarily close their businesses, or have experienced other negative business consequences which have led to cash flow pressures at the underlying properties. In some cases, these borrowers have requested temporary interest deferral or forbearance, or other modifications of their loans.
Since the outbreak of the COVID-19 pandemic, we closed 12 payment related loan modifications, representing an aggregate principal balance of $1.3 billion and $10.6 million of interest deferrals for the quarter ended September 30, 2020. These loan modifications principally included temporary deferrals of interest and the repurposing of reserves, many of which were coupled with additional equity commitments from sponsors. We are generally encouraged by our borrowers’ initial response to the COVID-19 pandemic’s impacts on their properties. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.
Within residential lending, we continue to monitor the impact of forbearance arrangements granted by our master servicer for loans which have been securitized. In securitized transactions with advancing arrangements, the master servicer has advanced 100% of all unpaid principal and interest.
In our property segment, we collected 96% of rents due in the three months ended September 30, 2020. Collections were particularly strong in our Woodstar I and Woodstar II affordable housing portfolios, where 97% of rent due was collected. Given current demographic trends, which tend to favor flexible rental arrangements, we continue to see sustained demand in multifamily and decreased turnover.
65
In our infrastructure segment, we collected 100% of interest due in the three months ended September 30, 2020. We did not grant any payment related loan modifications during the three months ended September 30, 2020.
Goodwill and Intangible Assets
Goodwill is tested for impairment annually in the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Management considered the general economic decline and the impact of the COVID-19 pandemic, but did not identify any such event or circumstances. However, futureFuture 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.
2021
Commercial and Residential Lending Segment
•In July 2021, we contributed into a single asset securitization ("SASB"), STWD 2021-HTS, a previously originated $230.0 million first mortgage and mezzanine loan on a portfolio of 41 extended stay hotels with $210.1 million of third party financing at a weighted average cost of financing of LIBOR + 2.47%, inclusive of the amortization of deferred issuance costs. •Originated $1.7 billion of commercial loans during the quarter, including the following: ◦$245.1 million first mortgage loan for the refinancing of an existing construction loan for a mixed-use property located in Texas, of which the Company funded $229.1 million. ◦$235.1 million first mortgage and mezzanine loan for the refinancing of a 55-story office property located in Texas, of which the Company funded $200.3 million. ◦AU$240.3 million ($178.4 million) first mortgage loan for the acquisition and development of industrial and logistics assets located in Australia, of which the Company funded $102.8 million. ◦£122.0 million ($168.9 million) first mortgage loan for the acquisition and refurbishment of an office building located in the United Kingdom, of which the Company funded $80.7 million. ◦$148.3 million first mortgage loan for the refinancing of a 455-unit multifamily property located in Virginia, of which the Company funded $138.0 million. ◦$125.0 million first mortgage and mezzanine loan for the refinancing of an existing loan on a 26-story, multifamily building located in Pennsylvania, which the Company fully funded. •Funded $171.9 million of previously originated commercial loan commitments. •Received gross proceeds of $872.0 million ($399.5 million, net of debt repayments) from maturities and principal repayments on our commercial loans. •Received gross proceeds of $35.4 million ($9.1 million, net of debt repayments) from sales of senior interests in first mortgage loans. •Acquired $1.8 billion of residential loans, of which $262.2 million related to principal acquired upon redemption of a consolidated RMBS trust. •Received proceeds of $491.9 million, including retained RMBS of $33.0 million, from the securitization of $469.7 million of residential loans. •Amended residential loan repurchase facilities to increase the available borrowings by $650.0 million. |
Infrastructure Lending Segment
Amended a repurchase facility that provides for a temporary increase to available borrowings from $500.0 million to $650.0 million, with available capacity decreasing to $600.0 million in September 2022, $550.0 million in December 2022 and back to $500.0 million in March 2023. The amendment also extends the current maturity from February 2022 to September 2024, with two one-year extension options. In connection with this amendment, we terminated the Infrastructure Acquisition Facility and transferred the related financing to the amended repurchase facility. The facility carries an annual interest rate of LIBOR + 2.00%.
66
Developments During the Nine Months Ended September 30, 2020
2021
Commercial and Residential Lending Segment
•In May 2021, we refinanced a pool of our commercial loans held-for-investment through a collateralized loan obligation (“CLO”), STWD 2021-FL2. The CLO has a contractual maturity of April 2038 and a weighted average cost of financing of LIBOR + 1.78%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $1.3 billion of notes and preferred shares, of which $1.1 billion of notes was purchased by third party investors. We retained $70.1 million of notes, along with preferred shares with a liquidation preference of $127.5 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. •Originated or acquired $5.6 billion of commercial loans during the period, including the following: ◦£360.0 million ($504.5 million) first mortgage loan to finance the acquisition of a portfolio of vacation cottages, caravan homes and resorts across the United Kingdom, which the Company fully funded. ◦$460.0 million first mortgage, mezzanine loan and preferred equity interest for the refinancing of a five asset portfolio that includes four multifamily properties ($298.0 million) and an office property ($162.0 million) located in New York and Connecticut, of which the Company funded $297.9 million. ◦£227.6 million ($317.5 million) first mortgage loan for the refinancing of 14 assisted living facilities located across the United Kingdom, which the Company fully funded. ◦$295.0 million first mortgage and mezzanine loan for the refinancing of a 666 unit Class A high-rise multifamily property and 70,873 square foot office building located in California, of which the Company funded $280.0 million. 67 ◦$253.0 million first mortgage and mezzanine loan for the refinancing of a 495 unit, three tower multifamily property located in Florida, of which the Company funded $211.6 million. ◦$245.1 million first mortgage loan for the refinancing of an existing construction loan for a mixed-use property located in Texas, of which the Company funded $229.1 million. ◦$235.1 million first mortgage and mezzanine loan for the refinancing of a 55-story office property located in Texas, of which the Company funded $200.3 million. ◦$230.0 million first mortgage and mezzanine loan on a 41 property extended stay portfolio located across the U.S., which the Company fully funded. In July 2021, we contributed this loan into a single asset securitization, STWD 2021-HTS, with $210.1 million of third party financing at a weighted average cost of financing of LIBOR + 2.47%, inclusive of the amortization of deferred issuance costs. ◦$231.1 million first mortgage and mezzanine loan for the refinancing of a luxury residential project located in California, of which the Company funded $181.6 million and sold the $147.9 million senior interest in the first mortgage. •Funded $468.9 million of previously originated commercial loan commitments. •Received gross proceeds of $3.1 billion ($1.2 billion, net of debt repayments) from maturities and principal repayments on our commercial loans. •Received gross proceeds of $243.3 million and $21.5 million ($39.0 million and $2.5 million, net of debt repayments) from sales of senior interests in first mortgage loans and whole loan interests, respectively. •Sold commercial real estate in Montgomery, Alabama that was previously acquired through foreclosure in March 2019 for gross proceeds of $30.6 million and recognized a gain of $17.7 million. At the foreclosure date, the loan had a carrying value of $9.0 million ($20.9 million unpaid principal balance net of an $8.3 million allowance and $3.6 million of unamortized discount). •Acquired $2.7 billion of residential loans, of which $434.6 million related to principal acquired upon redemption of two consolidated RMBS trusts. •Received proceeds of $1.5 billion, including retained RMBS of $112.7 million, from the securitization of $1.4 billion of residential loans. •Received proceeds of $30.7 million from the sale of retained RMBS. •Entered into or amended residential loan repurchase facilities to increase the available borrowings by $1.8 billion. |
Infrastructure Lending Segment
In April 2021, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, STWD 2021-SIF1. The CLO has a contractual maturity of April 2032 and a weighted average cost of financing of LIBOR + 2.15%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $500.0 million of notes and preferred shares, of which $410.0 million of notes was purchased by third party investors. We retained preferred shares with a liquidation preference of $90.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash.
Amended a repurchase facility that provides for a temporary increase to available borrowings from $500.0 million to $650.0 million, with available capacity decreasing to $600.0 million in September 2022, $550.0 million in December 2022 and back to $500.0 million in March 2023. The amendment also extends the current maturity from February 2022 to September 2024, with two one-year extension options. In connection with this amendment, we terminated the Infrastructure Acquisition Facility and transferred the related financing to the amended repurchase facility. The facility carries an annual interest rate of LIBOR + 2.00%.
Refinanced our Woodstar II Portfolio by entering into mortgage loans with total borrowings of $82.9 million. The loans carry seven-year terms and a weighted average fixed annual interest rate of 4.36%. A portion of the net proceeds from the mortgage loans was used to repay $4.9 million of outstanding government sponsored mortgage loans.
67
•
Obtained 20 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $16.1 billion, bringing our total named special servicing portfolio to $91.4 billion. •Sold commercial real estate for gross proceeds of $30.9 million and recognized a gain of $9.7 million. Corporate •Issued $400.0 million of 3.625% Senior Notes due 2026. •Redeemed $400.0 million of 5.00% Senior Notes due December 2021. •Amended the term loan facility to increase the incremental borrowings by $150.0 million and reduce the annual interest rate by 0.25% to LIBOR + 3.25% on all the incremental borrowings, subject to a 0.75% LIBOR floor. Additionally, we increased the maximum facility size of the revolver by $30.0 million to $150.0 million, reduced the annual interest rate by 0.50% to SOFR + 2.50% and extended the maturity from July 2024 to April 2026. |
Corporate Financing
Subsequent Events
68
Results of Operations
| | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | | | For the Nine Months Ended | | | | ||||||||
| | September 30, | | | | | September 30, | | | | ||||||||
|
| 2020 |
| 2019 |
| $ Change |
| 2020 | | 2019 | | $ Change | ||||||
Revenues: | | | | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | | $ | 173,547 | | $ | 163,808 | | $ | 9,739 | | $ | 553,351 | | $ | 526,418 | | $ | 26,933 |
Infrastructure Lending Segment | | | 18,571 | | | 23,612 | | | (5,041) | | | 61,737 | | | 78,264 | | | (16,527) |
Property Segment | | | 63,973 | | | 72,376 | | | (8,403) | | | 191,680 | | | 215,389 | | | (23,709) |
Investing and Servicing Segment | |
| 49,070 | |
| 67,397 | |
| (18,327) | |
| 137,655 | |
| 199,980 | |
| (62,325) |
Corporate | |
| — | |
| — | |
| — | | | — | | | 26 | | | (26) |
Securitization VIE eliminations | |
| (37,734) | |
| (38,863) | |
| 1,129 | |
| (98,830) | |
| (110,086) | |
| 11,256 |
| |
| 267,427 | |
| 288,330 | |
| (20,903) | |
| 845,593 | |
| 909,991 | |
| (64,398) |
Costs and expenses: | | | | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | |
| 53,891 | |
| 60,959 | |
| (7,068) | |
| 222,862 | |
| 199,176 | |
| 23,686 |
Infrastructure Lending Segment | | ��� | 8,262 | | | 18,773 | | | (10,511) | | | 48,453 | | | 64,143 | | | (15,690) |
Property Segment | | | 60,801 | | | 69,126 | | | (8,325) | | | 182,568 | | | 204,813 | | | (22,245) |
Investing and Servicing Segment | |
| 33,035 | |
| 42,288 | |
| (9,253) | |
| 98,955 | |
| 121,746 | |
| (22,791) |
Corporate | |
| 53,072 | |
| 62,155 | |
| (9,083) | |
| 180,032 | |
| 170,231 | |
| 9,801 |
Securitization VIE eliminations | |
| 97 | |
| (57) | |
| 154 | |
| 135 | |
| (107) | |
| 242 |
| |
| 209,158 | |
| 253,244 | |
| (44,086) | |
| 733,005 | |
| 760,002 | |
| (26,997) |
Other income (loss): | | | | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | |
| 72,991 | |
| 12,309 | |
| 60,682 | |
| 39,808 | |
| 20,086 | |
| 19,722 |
Infrastructure Lending Segment | | | 140 | | | (2,604) | | | 2,744 | | | (2,453) | | | (8,669) | | | 6,216 |
Property Segment | | | (300) | | | 6,115 | | | (6,415) | | | (37,148) | | | (46,502) | | | 9,354 |
Investing and Servicing Segment | |
| 9,971 | |
| 59,349 | |
| (49,378) | |
| 11,875 | |
| 111,941 | |
| (100,066) |
Corporate | | | 645 | | | 5,317 | | | (4,672) | | | 34,397 | | | 30,186 | | | 4,211 |
Securitization VIE eliminations | |
| 37,861 | |
| 38,942 | |
| (1,081) | |
| 99,175 | |
| 110,304 | |
| (11,129) |
| |
| 121,308 | |
| 119,428 | |
| 1,880 | |
| 145,654 | |
| 217,346 | |
| (71,692) |
Income (loss) before income taxes: | | | | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | |
| 192,647 | |
| 115,158 | |
| 77,489 | |
| 370,297 | |
| 347,328 | |
| 22,969 |
Infrastructure Lending Segment | | | 10,449 | | | 2,235 | | | 8,214 | | | 10,831 | | | 5,452 | | | 5,379 |
Property Segment | | | 2,872 | | | 9,365 | | | (6,493) | | | (28,036) | | | (35,926) | | | 7,890 |
Investing and Servicing Segment | |
| 26,006 | |
| 84,458 | |
| (58,452) | |
| 50,575 | |
| 190,175 | |
| (139,600) |
Corporate | | | (52,427) | | | (56,838) | | | 4,411 | | | (145,635) | | | (140,019) | | | (5,616) |
Securitization VIE eliminations | |
| 30 | |
| 136 | |
| (106) | |
| 210 | |
| 325 | |
| (115) |
| |
| 179,577 | |
| 154,514 | |
| 25,063 | |
| 258,242 | |
| 367,335 | |
| (109,093) |
Income tax provision | |
| (14,843) | |
| (4,513) | |
| (10,330) | |
| (6,816) | |
| (8,380) | |
| 1,564 |
Net income attributable to non-controlling interests | |
| (12,900) | |
| (9,605) | |
| (3,295) | |
| (26,705) | |
| (21,160) | |
| (5,545) |
Net income attributable to Starwood Property Trust, Inc. | | $ | 151,834 | | $ | 140,396 | | $ | 11,438 | | $ | 224,721 | | $ | 337,795 | | $ | (113,074) |
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For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
Revenues: | September 30, 2021 | June 30, 2021 | $ Change | September 30, 2021 | September 30, 2020 | $ Change | |||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | $ | 197,045 | $ | 184,490 | $ | 12,555 | $ | 572,066 | $ | 553,351 | $ | 18,715 | |||||||||||||||||||||||
Infrastructure Lending Segment | 22,172 | 21,795 | 377 | 63,432 | 61,737 | 1,695 | |||||||||||||||||||||||||||||
Property Segment | 66,727 | 65,454 | 1,273 | 197,325 | 191,680 | 5,645 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 52,441 | 57,504 | (5,063) | 154,492 | 137,655 | 16,837 | |||||||||||||||||||||||||||||
Corporate | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Securitization VIE eliminations | (36,099) | (38,376) | 2,277 | (106,932) | (98,830) | (8,102) | |||||||||||||||||||||||||||||
302,286 | 290,867 | 11,419 | 880,383 | 845,593 | 34,790 | ||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | 62,457 | 47,543 | 14,914 | 166,414 | 222,862 | (56,448) | |||||||||||||||||||||||||||||
Infrastructure Lending Segment | 12,207 | 14,178 | (1,971) | 39,341 | 48,453 | (9,112) | |||||||||||||||||||||||||||||
Property Segment | 62,431 | 61,714 | 717 | 183,643 | 182,568 | 1,075 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 33,704 | 40,253 | (6,549) | 106,414 | 98,955 | 7,459 | |||||||||||||||||||||||||||||
Corporate | 60,703 | 62,376 | (1,673) | 194,726 | 180,032 | 14,694 | |||||||||||||||||||||||||||||
Securitization VIE eliminations | (149) | (125) | (24) | (367) | 135 | (502) | |||||||||||||||||||||||||||||
231,353 | 225,939 | 5,414 | 690,171 | 733,005 | (42,834) | ||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | 25,633 | (4,051) | 29,684 | 42,743 | 39,808 | 2,935 | |||||||||||||||||||||||||||||
Infrastructure Lending Segment | 300 | (930) | 1,230 | (535) | (2,453) | 1,918 | |||||||||||||||||||||||||||||
Property Segment | (334) | (397) | 63 | 3,877 | (37,148) | 41,025 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 15,869 | 24,904 | (9,035) | 59,733 | 11,875 | 47,858 | |||||||||||||||||||||||||||||
Corporate | (446) | 927 | (1,373) | (6,362) | 34,397 | (40,759) | |||||||||||||||||||||||||||||
Securitization VIE eliminations | 36,033 | 37,650 | (1,617) | 106,107 | 99,175 | 6,932 | |||||||||||||||||||||||||||||
77,055 | 58,103 | 18,952 | 205,563 | 145,654 | 59,909 | ||||||||||||||||||||||||||||||
Income (loss) before income taxes: | |||||||||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | 160,221 | 132,896 | 27,325 | 448,395 | 370,297 | 78,098 | |||||||||||||||||||||||||||||
Infrastructure Lending Segment | 10,265 | 6,687 | 3,578 | 23,556 | 10,831 | 12,725 | |||||||||||||||||||||||||||||
Property Segment | 3,962 | 3,343 | 619 | 17,559 | (28,036) | 45,595 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 34,606 | 42,155 | (7,549) | 107,811 | 50,575 | 57,236 | |||||||||||||||||||||||||||||
Corporate | (61,149) | (61,449) | 300 | (201,088) | (145,635) | (55,453) | |||||||||||||||||||||||||||||
Securitization VIE eliminations | 83 | (601) | 684 | (458) | 210 | (668) | |||||||||||||||||||||||||||||
147,988 | 123,031 | 24,957 | 395,775 | 258,242 | 137,533 | ||||||||||||||||||||||||||||||
Income tax (provision) benefit | (7,501) | 3,353 | (10,854) | (6,378) | (6,816) | 438 | |||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (11,885) | (10,074) | (1,811) | (33,107) | (26,705) | (6,402) | |||||||||||||||||||||||||||||
Net income attributable to Starwood Property Trust, Inc. | $ | 128,602 | $ | 116,310 | $ | 12,292 | $ | 356,290 | $ | 224,721 | $ | 131,569 |
Three Months Ended September 30, 20202021 Compared to the Three Months Ended SeptemberJune 30, 2019
2021
For the Three Months Ended | |||||||||||||||||
September 30, 2021 | June 30, 2021 | Change | |||||||||||||||
Interest income from loans | $ | 179,486 | $ | 165,697 | $ | 13,789 | |||||||||||
Interest income from investment securities | 16,043 | 17,190 | (1,147) | ||||||||||||||
Interest expense | (52,066) | (48,356) | (3,710) | ||||||||||||||
Net interest income | $ | 143,463 | $ | 134,531 | $ | 8,932 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | September 30, | | | | ||||
|
| 2020 |
| 2019 |
| Change | |||
Interest income from loans | | $ | 149,972 | | $ | 145,290 | | $ | 4,682 |
Interest income from investment securities | |
| 21,385 | |
| 18,163 | |
| 3,222 |
Interest expense | |
| (38,422) | |
| (51,844) | |
| 13,422 |
Net interest income | | $ | 132,935 | | $ | 111,609 | | $ | 21,326 |
For the Three Months Ended | |||||||||||
September 30, 2021 | June 30, 2021 | ||||||||||
Commercial | 5.5 | % | 5.6 | % | |||||||
Residential | 5.0 | % | 5.5 | % | |||||||
Overall | 5.5 | % | 5.7 | % |
| | | | | |
| | For the Three Months Ended | | ||
| | September 30, | | ||
| | 2020 | | 2019 | |
Commercial | | 6.0 | % | 7.1 | % |
Residential | | 7.4 | % | 6.5 | % |
Overall | | 6.2 | % | 7.0 | % |
higher prepayment related income on commercial loans.
70
Other Income
(Loss)
Costs and Expenses
For the Three Months Ended | |||||||||||||||||
September 30, 2021 | June 30, 2021 | Change | |||||||||||||||
Interest income from loans | $ | 21,566 | $ | 21,171 | $ | 395 | |||||||||||
Interest income from investment securities | 540 | 555 | (15) | ||||||||||||||
Interest expense | (9,381) | (9,694) | 313 | ||||||||||||||
Net interest income | $ | 12,725 | $ | 12,032 | $ | 693 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | September 30, | | | | ||||
|
| 2020 |
| 2019 |
| Change | |||
Interest income from loans | | $ | 17,835 | | $ | 22,763 | | $ | (4,928) |
Interest income from investment securities | |
| 635 | |
| 810 | |
| (175) |
Interest expense | |
| (8,914) | |
| (14,422) | |
| 5,508 |
Net interest income | | $ | 9,556 | | $ | 9,151 | | $ | 405 |
71
During the three months ended September 30, 20202021 and 2019,June 30, 2021, the weighted average unlevered yields on the Infrastructure Lending Segment’s investments were as follows:
For the Three Months Ended | |||||||||||
September 30, 2021 | June 30, 2021 | ||||||||||
Loans and investment securities held-for-investment | 4.9 | % | 4.9 | % | |||||||
Loans held-for-sale | 2.8 | % | 2.9 | % |
| | | | | |
| | For the Three Months Ended | | ||
| | September 30, | | ||
| | 2020 | | 2019 | |
Loans and investment securities held-for-investment | | 4.7 | % | 6.1 | % |
Loans held-for-sale | | 3.5 | % | 4.2 | % |
$ Change from prior period | |||||||||||||||||||||||||||||
Revenues | Costs and expenses | Gain (loss) on derivative financial instruments | Other income (loss) | Income (loss) before income taxes | |||||||||||||||||||||||||
Master Lease Portfolio | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Medical Office Portfolio | 423 | 359 | 44 | — | 108 | ||||||||||||||||||||||||
Woodstar I Portfolio | 682 | 107 | 10 | — | 585 | ||||||||||||||||||||||||
Woodstar II Portfolio | 168 | 297 | — | — | (129) | ||||||||||||||||||||||||
Other/Corporate | — | (46) | — | 9 | 55 | ||||||||||||||||||||||||
Total | $ | 1,273 | $ | 717 | $ | 54 | $ | 9 | $ | 619 | |||||||||||||||||||
| | | | | | | | | | | | | | | |
|
| $ Change from prior period | |||||||||||||
| | | | Costs and | | Gain (loss) on derivative | | | | Income (loss) before | |||||
| | Revenues |
| expenses |
| financial instruments |
| Other income (loss) |
| income taxes | |||||
Master Lease Portfolio | | $ | 8 | | $ | 44 | | $ | — | | $ | — | | $ | (36) |
Medical Office Portfolio | | | 552 | | | (1,421) | | | 4,066 | | | — | | | 6,039 |
Woodstar I Portfolio | | | (239) | | | 1,296 | | | (226) | | | — | | | (1,761) |
Woodstar II Portfolio | | | (125) | | | — | | | — | | | — | | | (125) |
Ireland Portfolio | | | (8,599) | | | (8,001) | | | (10,053) | | | 7 | | | (10,644) |
Investment in unconsolidated entities | |
| — | |
| — | |
| — | |
| (223) | |
| (223) |
Other/Corporate | | | — | | | (243) | | | — | | | 14 | | | 257 |
Total | | $ | (8,403) | | $ | (8,325) | | $ | (6,213) | | $ | (202) | | $ | (6,493) |
72
Other Income (Loss)
For the three months ended September 30, 2020,2021, other incomeloss of our Property Segment decreased $6.4$0.1 million to a loss of $0.3 million, compared to income of $6.1$0.4 million for the three months ended SeptemberJune 30, 2019. The decrease in other income was primarily due to a $6.2 million unfavorable change in gain (loss) on derivatives, consisting of (i) the non-recurrence of a $10.0 million gain in the 2019 third quarter on foreign exchange contracts which hedged our Euro currency exposure with respect to the Ireland Portfolio, partially offset by (ii) a $3.8 million decreased loss on interest rate swaps which primarily hedge the variable interest rate risk on borrowings secured by our Medical Office Portfolio.
2021.
loans.
(Loss)
73
Securitization VIE Eliminations
Income Tax Provision
(Provision) Benefit
interest.
2020
74
Statements).2021. The CECLlarge provision in the first nine months of 2020 was magnified bydue to the significant deterioration in macroeconomic forecasts between the January 1 CECL effective date and the September 30 period end due to the economicinitial disruption caused by the COVID-19 pandemic.pandemic and its effect on our then estimate of CECL. The decreasecredit loss reversal in the nine months of 2021 was primarily due to an improvement in macroeconomic forecasts. The increase in interest expense was primarily due to higher average borrowings outstanding, partially offset by lower average LIBOR rates partially offset by higher average borrowings outstanding.rates.
| | | | | | | | | |
| | For the Nine Months Ended | | | | ||||
| | September 30, | | | | ||||
|
| 2020 |
| 2019 |
| Change | |||
Interest income from loans | | $ | 492,489 | | $ | 462,956 | | $ | 29,533 |
Interest income from investment securities | |
| 57,358 | |
| 62,438 | |
| (5,080) |
Interest expense | |
| (134,243) | |
| (172,012) | |
| 37,769 |
Net interest income | | $ | 415,604 | | $ | 353,382 | | $ | 62,222 |
For the Nine Months Ended September 30, | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
Interest income from loans | $ | 515,776 | $ | 492,489 | $ | 23,287 | |||||||||||
Interest income from investment securities | 51,618 | 57,358 | (5,740) | ||||||||||||||
Interest expense | (144,717) | (134,243) | (10,474) | ||||||||||||||
Net interest income | $ | 422,677 | $ | 415,604 | $ | 7,073 |
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Commercial | 5.8 | % | 6.5 | % | |||||||
Residential | 5.0 | % | 5.7 | % | |||||||
Overall | 5.8 | % | 6.5 | % |
| | | | | |
| | For the Nine Months Ended | | ||
| | September 30, | | ||
| | 2020 | | 2019 | |
Commercial | | 6.5 | % | 7.5 | % |
Residential | | 6.8 | % | 6.9 | % |
Overall | | 6.5 | % | 7.4 | % |
and LIBOR rates affecting our commercial yields as well as lower average interest rates on our newer loans.
widening of credit spreads resulting from market disruption and dislocation caused by the impacts of COVID-19 in the first quarter of 2020, partially offset by a tightening of those credit spreads in the second and third quarters.
Infrastructure Lending Segment
Costs and Expenses
For the Nine Months Ended September 30, | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
Interest income from loans | $ | 61,545 | $ | 59,374 | $ | 2,171 | |||||||||||
Interest income from investment securities | 1,659 | 2,019 | (360) | ||||||||||||||
Interest expense | (27,916) | (31,709) | 3,793 | ||||||||||||||
Net interest income | $ | 35,288 | $ | 29,684 | $ | 5,604 |
| | | | | | | | | |
| | For the Nine Months Ended | | | | ||||
| | September 30, | | | | ||||
|
| 2020 |
| 2019 |
| Change | |||
Interest income from loans | | $ | 59,374 | | $ | 74,969 | | $ | (15,595) |
Interest income from investment securities | |
| 2,019 | |
| 2,563 | |
| (544) |
Interest expense | |
| (31,709) | |
| (49,257) | |
| 17,548 |
Net interest income | | $ | 29,684 | | $ | 28,275 | | $ | 1,409 |
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Loans and investment securities held-for-investment | 4.9 | % | 5.3 | % | |||||||
Loans held-for-sale | 2.8 | % | 3.7 | % |
| | | | | |
| | For the Nine Months Ended | | ||
| | September 30, | | ||
| | 2020 | | 2019 | |
Loans and investment securities held-for-investment | | 5.3 | % | 6.2 | % |
Loans held-for-sale | | 3.7 | % | 4.0 | % |
76
Other Loss
$ Change from prior period | |||||||||||||||||||||||||||||
Revenues | Costs and expenses | Gain (loss) on derivative financial instruments | Other income (loss) | Income (loss) before income taxes | |||||||||||||||||||||||||
Master Lease Portfolio | $ | (11) | $ | (125) | $ | — | $ | — | $ | 114 | |||||||||||||||||||
Medical Office Portfolio | 799 | (3,037) | 38,846 | — | 42,682 | ||||||||||||||||||||||||
Woodstar I Portfolio | 2,848 | 255 | 338 | 1,702 | 4,633 | ||||||||||||||||||||||||
Woodstar II Portfolio | 2,023 | 4,535 | — | (141) | (2,653) | ||||||||||||||||||||||||
Other/Corporate | (14) | (553) | — | 280 | 819 | ||||||||||||||||||||||||
Total | $ | 5,645 | $ | 1,075 | $ | 39,184 | $ | 1,841 | $ | 45,595 |
| | | | | | | | | | | | | | | |
|
| $ Change from prior year | |||||||||||||
| | | | Costs and | | Gain (loss) on derivative | | | | Income (loss) before | |||||
| | Revenues |
| expenses |
| financial instruments |
| Other income (loss) |
| income taxes | |||||
Master Lease Portfolio | | $ | 11 | | $ | 120 | | $ | — | | $ | — | | $ | (109) |
Medical Office Portfolio | | | (731) | | | (5,543) | | | (14,404) | | | — | | | (9,592) |
Woodstar I Portfolio | | | 1,832 | | | 5,889 | | | (283) | | | (1,702) | | | (6,042) |
Woodstar II Portfolio | | | 1,622 | | | 537 | | | — | | | — | | | 1,085 |
Ireland Portfolio | | | (26,457) | | | (23,012) | | | (16,506) | | | 7 | | | (19,944) |
Investment in unconsolidated entities | |
| — | |
| — | |
| — | |
| 42,538 | |
| 42,538 |
Other/Corporate | | | 14 | | | (236) | | | — | | | (296) | | | (46) |
Total | | $ | (23,709) | | $ | (22,245) | | $ | (31,193) | | $ | 40,547 | | $ | 7,890 |
See Note 6 to the Condensed Consolidated Financial Statements for a description of the above-referenced Property Segment portfolios. The Ireland Portfolio, which was comprised of 11 office properties and one multifamily property all located in Dublin, Ireland, was sold in December 2019.
Revenues
2020.
Income (Loss)
77
Investing and Servicing Segment
related loan resolutions.
fees and amortization of manager equity plan awards and $2.1 million in general and administrative expenses.
(Loss)
78
Income Tax Benefit (Provision)
Provision
non-cash equity compensation expense; (ii)incentive fees due under our management agreement; (iii)depreciation and amortization of real estate and associated intangibles; (iv)acquisition costs associated with successful acquisitions; (v) |
any |
In determining what constitutes unrealized gains, losses or other non-cash items recorded in net income (loss) as referencedfor the period, regardless of whether such items are included in item (v), since its inceptionother comprehensive income or loss, or in 2009, the Companynet income (loss); and
79
We believe that CoreDistributable Earnings provides an additional measuremeaningful information to consider in addition to our net income (loss) and cash flow from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our core operatingcommon stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our net taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Further, Distributable Earnings helps us to evaluate our performance by eliminatingexcluding the impacteffects of certain non-cash expensestransactions and facilitating a comparisonGAAP adjustments that we believe are not necessarily indicative of our financial results to those of other comparable REITs with fewer or no non-cash adjustmentscurrent loan portfolio and comparison ofoperations, and is a performance metric we consider when declaring our own operating results from period to period. Our management uses Coredividends. We also use Distributable Earnings in this way, and also uses Core Earnings(previously defined as “Core Earnings”) to compute the incentive fee due under our management agreement. The Company believes that its investors also use Core Earnings or a comparable supplemental performance measure to evaluate and compare the performance of the Company and its peers, and as such, the Company believes that the disclosure of Core Earnings is useful to (and expected by) its investors.
However, the Company cautions that Core
companies.
Unvested stock awards – Currently, unvested stock awards are excluded from the denominator of GAAP EPS. The related compensation expense is also excluded from Distributable Earnings. In order to effectuate dilution from these awards in the Distributable Earnings computation, we adjust the GAAP diluted share count to include these shares.
Convertible Notes – Conversion of our Convertible Notes is an event that is contingent upon numerous factors, none of which are in our control, and is an event that may or may not occur. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, we adjust the GAAP diluted share count to exclude the potential shares issuable upon conversion until a conversion occurs.
| | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended | | ||||
| | September 30, | | September 30, | | ||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | |
Diluted weighted average shares - GAAP | | 292,458 | | 289,912 | | 281,868 | | 289,021 | |
Add: Unvested stock awards | | 2,520 | | 2,043 | | 2,587 | | 2,128 | |
Add: Woodstar II Class A Units | | 10,642 | | 11,001 | | 10,676 | | 11,491 | |
Less: Convertible Notes dilution | | (9,649) | | (9,649) | | — | | (9,857) | |
Diluted weighted average shares - Core |
| 295,971 |
| 293,307 |
| 295,131 |
| 292,783 | |
For the Three Months Ended | For the Nine Months Ended September 30, | ||||||||||||||||||||||
September 30, 2021 | June 30, 2021 | 2021 | 2020 | ||||||||||||||||||||
Diluted weighted average shares - GAAP EPS | 295,448 | 294,571 | 294,393 | 281,868 | |||||||||||||||||||
Add: Unvested stock awards | 4,167 | 4,398 | 4,274 | 2,587 | |||||||||||||||||||
Add: Woodstar II Class A Units | 9,849 | 10,383 | 10,282 | 10,676 | |||||||||||||||||||
Less: Convertible Notes dilution | (9,649) | (9,649) | (9,649) | — | |||||||||||||||||||
Diluted weighted average shares - Distributable EPS | 299,815 | 299,703 | 299,300 | 295,131 |
2021.
Distributable Earnings For the Three-Month Periods Ended March 31, June 30, September 30, 2021 $ 0.50 $ 0.51 $ 0.52 2020 0.55 0.43 0.50
| | | | | | | | | |
| | Core Earnings For the Three-Month Periods Ended | |||||||
|
| March 31 |
| June 30 |
| September 30 | |||
2020 | | $ | 0.55 | | $ | 0.43 | | $ | 0.50 |
2019 | | $ | 0.28 | | $ | 0.52 | | $ | 0.52 |
Core Earnings per weighted average diluted share for the nine months ended September 30, 2019 does not equal the sum of the individual quarters due to rounding and other computational factors.
81
Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019
The following table presents our summarized results of operations and reconciliation to CoreDistributable Earnings for the three months ended September 30, 2020,2021, by business segment (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| |
| |
| |
| |
| | ||||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 173,547 | | $ | 18,571 | | $ | 63,973 | | $ | 49,070 | | $ | — | | $ | 305,161 |
Costs and expenses | |
| (53,891) | |
| (8,262) | |
| (60,801) | |
| (33,035) | | | (53,072) | |
| (209,061) |
Other income (loss) | |
| 72,991 | |
| 140 | |
| (300) | |
| 9,971 | |
| 645 | |
| 83,447 |
Income (loss) before income taxes | |
| 192,647 | |
| 10,449 | |
| 2,872 | |
| 26,006 | | | (52,427) | |
| 179,547 |
Income tax (provision) benefit | |
| (16,700) | |
| (86) | |
| — | |
| 1,943 | | | — | |
| (14,843) |
Income attributable to non-controlling interests | |
| (3) | |
| — | |
| (5,072) | |
| (7,795) | |
| — | |
| (12,870) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | | 175,944 | |
| 10,363 | |
| (2,200) | |
| 20,154 | | | (52,427) | |
| 151,834 |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 5,072 | | | — | | | — | |
| 5,072 |
Non-cash equity compensation expense | | | 1,015 | | | (126) | | | 54 | | | 1,215 | | | 4,131 | |
| 6,289 |
Acquisition and investment pursuit costs | | | (163) | | | — | | | (89) | | | — | | | — | |
| (252) |
Depreciation and amortization | | | 370 | | | 78 | | | 19,191 | | | 3,525 | | | — | |
| 23,164 |
Credit loss reversal, net | | | (259) | | | (4,369) | | | — | | | — | | | — | |
| (4,628) |
Interest income adjustment for securities | | | (1,035) | | | — | | | — | | | 1,914 | | | — | |
| 879 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (246) | | | (246) |
Income tax provision associated with fair value adjustments | | | 5,519 | | | — | | | — | | | 879 | | | — | | | 6,398 |
Other non-cash items | | | 3 | | | — | | | (713) | | | 225 | | | 158 | |
| (327) |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | | | (59,402) | | | — | | | — | | | (1,982) | | | — | |
| (61,384) |
Securities | | | (13,611) | | | — | | | — | | | (3,249) | | | — | | | (16,860) |
Derivatives | | | 28,336 | | | (173) | | | (1,377) | | | (551) | | | 4,380 | |
| 30,615 |
Foreign currency | | | (25,302) | | | (110) | | | (14) | | | (26) | | | — | |
| (25,452) |
(Earnings) loss from unconsolidated entities | | | (3,253) | | | 80 | | | — | | | (358) | | | — | |
| (3,531) |
Recognition of Core realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | | | 49,241 | | | — | | | — | | | 6,201 | | | — | | | 55,442 |
Securities | | | — | | | — | | | — | | | (4,318) | | | — | |
| (4,318) |
Derivatives | | | (11,625) | | | — | | | (35) | | | (7,341) | | | — | |
| (19,001) |
Foreign currency | | | 799 | | | (5) | | | 16 | | | 26 | | | — | |
| 836 |
Earnings (loss) from unconsolidated entities | | | 3,352 | | | (80) | | | — | | | 772 | | | — | |
| 4,044 |
Core Earnings (Loss) | | $ | 149,929 | | $ | 5,658 | | $ | 19,905 | | $ | 17,086 | | $ | (44,004) | | $ | 148,574 |
Core Earnings (Loss) per Weighted Average Diluted Share | | $ | 0.51 | | $ | 0.02 | | $ | 0.06 | | $ | 0.06 | | $ | (0.15) | | $ | 0.50 |
82
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 197,045 | $ | 22,172 | $ | 66,727 | $ | 52,441 | $ | — | $ | 338,385 | |||||||||||||||||||||||
Costs and expenses | (62,457) | (12,207) | (62,431) | (33,704) | (60,703) | (231,502) | |||||||||||||||||||||||||||||
Other income (loss) | 25,633 | 300 | (334) | 15,869 | (446) | 41,022 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 160,221 | 10,265 | 3,962 | 34,606 | (61,149) | 147,905 | |||||||||||||||||||||||||||||
Income tax (provision) benefit | (5,652) | 488 | — | (2,337) | — | (7,501) | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (3) | — | (4,691) | (7,108) | — | (11,802) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 154,566 | 10,753 | (729) | 25,161 | (61,149) | 128,602 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 4,691 | — | — | 4,691 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 1,787 | 423 | 54 | 1,108 | 6,080 | 9,452 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 953 | 953 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | (98) | — | (89) | — | — | (187) | |||||||||||||||||||||||||||||
Depreciation and amortization | 252 | 91 | 17,950 | 3,884 | — | 22,177 | |||||||||||||||||||||||||||||
Credit loss provision (reversal), net | 19 | (582) | — | — | — | (563) | |||||||||||||||||||||||||||||
Interest income adjustment for securities | (171) | — | — | 3,748 | — | 3,577 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (246) | (246) | |||||||||||||||||||||||||||||
Other non-cash items | 3 | — | (282) | 173 | (2) | (108) | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (22,464) | — | — | (9,263) | — | (31,727) | |||||||||||||||||||||||||||||
Securities | 8,682 | — | — | (2,870) | — | 5,812 | |||||||||||||||||||||||||||||
Derivatives | (40,473) | (150) | (1,495) | (4,660) | 2,406 | (44,372) | |||||||||||||||||||||||||||||
Foreign currency | 26,820 | 168 | 16 | (1) | — | 27,003 | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (1,666) | (399) | — | (153) | — | (2,218) | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 19,010 | — | — | 9,141 | — | 28,151 | |||||||||||||||||||||||||||||
Securities | (11,093) | — | — | 3,642 | — | (7,451) | |||||||||||||||||||||||||||||
Derivatives | 6,129 | — | (35) | 4,183 | — | 10,277 | |||||||||||||||||||||||||||||
Foreign currency | (1,171) | (13) | (16) | 1 | — | (1,199) | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 1,806 | 399 | — | 261 | — | 2,466 | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 141,938 | $ | 10,690 | $ | 20,065 | $ | 34,355 | $ | (51,958) | $ | 155,090 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 0.47 | $ | 0.04 | $ | 0.07 | $ | 0.11 | $ | (0.17) | $ | 0.52 |
The following table presents our summarized results of operations and reconciliation to CoreDistributable Earnings for the three months ended SeptemberJune 30, 2019,2021, by business segment (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| | |
| |
| | | | | | |||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 163,808 | | $ | 23,612 | | $ | 72,376 | | $ | 67,397 | | $ | — | | $ | 327,193 |
Costs and expenses | |
| (60,959) | | | (18,773) | | | (69,126) | | | (42,288) | | | (62,155) | | | (253,301) |
Other income (loss) | |
| 12,309 | | | (2,604) | | | 6,115 | | | 59,349 | | | 5,317 | | | 80,486 |
Income (loss) before income taxes | |
| 115,158 | | | 2,235 | | | 9,365 | | | 84,458 | | | (56,838) | | | 154,378 |
Income tax (provision) benefit | |
| (3,194) | | | 475 | | | — | | | (1,794) | | | — | | | (4,513) |
Income attributable to non-controlling interests | |
| — | | | — | | | (5,250) | | | (4,219) | | | — | | | (9,469) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | | 111,964 | | | 2,710 | | | 4,115 | | | 78,445 | | | (56,838) | | | 140,396 |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 5,250 | | | — | | | — | | | 5,250 |
Non-cash equity compensation expense | | | 1,140 | | | 577 | | | 83 | | | 1,765 | | | 9,411 | | | 12,976 |
Management incentive fee | | | — | | | — | | | — | | | — | | | 1,875 | | | 1,875 |
Acquisition and investment pursuit costs | | | 6 | | | — | | | (89) | | | (146) | | | — | | | (229) |
Depreciation and amortization | | | 339 | | | 15 | | | 23,440 | | | 4,444 | | | — | | | 28,238 |
Credit loss reversal, net | | | (39) | | | — | | | — | | | — | | | — | | | (39) |
Interest income adjustment for securities | | | (194) | | | — | | | — | | | 5,345 | | | — | | | 5,151 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (247) | | | (247) |
Other non-cash items | | | — | | | — | | | 321 | | | 191 | | | 152 | | | 664 |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | | | (10,088) | | | — | | | — | | | (22,433) | | | — | | | (32,521) |
Securities | | | 303 | | | — | | | — | | | (22,476) | | | — | | | (22,173) |
Derivatives | | | (15,749) | | | 109 | | | (4,576) | | | 6,590 | | | (6,913) | | | (20,539) |
Foreign currency | | | 15,337 | | | 319 | | | 8 | | | — | | | — | | | 15,664 |
Earnings from unconsolidated entities | | | (2,507) | | | — | | | (223) | | | (253) | | | — | | | (2,983) |
Recognition of Core realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | | | 8,383 | | | (230) | | | — | | | 22,134 | | | — | | | 30,287 |
Securities | | | 373 | | | — | | | — | | | 4,593 | | | — | | | 4,966 |
Derivatives | | | 977 | | | 64 | | | 406 | | | (7,875) | | | — | | | (6,428) |
Foreign currency | | | (3,911) | | | (171) | | | (8) | | | — | | | — | | | (4,090) |
Earnings from unconsolidated entities | | | 2,298 | | | — | | | — | | | 1,324 | | | — | | | 3,622 |
Sales of properties | | | — | | | — | | | — | | | (7,221) | | | — | | | (7,221) |
Core Earnings (Loss) | | $ | 108,632 | | $ | 3,393 | | $ | 28,727 | | $ | 64,427 | | $ | (52,560) | | $ | 152,619 |
Core Earnings (Loss) per Weighted Average Diluted Share | | $ | 0.37 | | $ | 0.01 | | $ | 0.10 | | $ | 0.22 | | $ | (0.18) | | $ | 0.52 |
83
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 184,490 | $ | 21,795 | $ | 65,454 | $ | 57,504 | $ | — | $ | 329,243 | |||||||||||||||||||||||
Costs and expenses | (47,543) | (14,178) | (61,714) | (40,253) | (62,376) | (226,064) | |||||||||||||||||||||||||||||
Other income (loss) | (4,051) | (930) | (397) | 24,904 | 927 | 20,453 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 132,896 | 6,687 | 3,343 | 42,155 | (61,449) | 123,632 | |||||||||||||||||||||||||||||
Income tax benefit (provision) | 8,043 | (58) | — | (4,632) | — | 3,353 | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (4) | — | (4,914) | (5,757) | — | (10,675) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 140,935 | 6,629 | (1,571) | 31,766 | (61,449) | 116,310 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 4,914 | — | — | 4,914 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 1,859 | 440 | 57 | 1,190 | 6,051 | 9,597 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 5,031 | 5,031 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | (196) | — | (88) | (58) | — | (342) | |||||||||||||||||||||||||||||
Depreciation and amortization | 251 | 90 | 17,969 | 3,812 | — | 22,122 | |||||||||||||||||||||||||||||
Credit loss (reversal) provision, net | (12,447) | 603 | — | — | — | (11,844) | |||||||||||||||||||||||||||||
Interest income adjustment for securities | (861) | — | — | 3,662 | — | 2,801 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (247) | (247) | |||||||||||||||||||||||||||||
Other non-cash items | 6 | — | (262) | 205 | — | (51) | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (12,329) | — | — | (33,538) | — | (45,867) | |||||||||||||||||||||||||||||
Securities | 9,402 | — | — | 12,585 | — | 21,987 | |||||||||||||||||||||||||||||
Derivatives | 3,594 | (173) | (1,401) | 4,927 | 1,532 | 8,479 | |||||||||||||||||||||||||||||
Foreign currency | (2,715) | 62 | 25 | 1 | — | (2,627) | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (1,996) | 70 | — | 507 | — | (1,419) | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | (9,723) | — | (9,723) | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 11,062 | — | — | 30,623 | — | 41,685 | |||||||||||||||||||||||||||||
Securities | (18,088) | — | — | (2,779) | — | (20,867) | |||||||||||||||||||||||||||||
Derivatives | (2,546) | — | (34) | (718) | — | (3,298) | |||||||||||||||||||||||||||||
Foreign currency | 6,518 | (31) | (25) | (1) | — | 6,461 | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 4,444 | (70) | — | 776 | — | 5,150 | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | 4,975 | — | 4,975 | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 126,893 | $ | 7,620 | $ | 19,584 | $ | 48,212 | $ | (49,082) | $ | 153,227 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 0.42 | $ | 0.02 | $ | 0.07 | $ | 0.16 | $ | (0.16) | $ | 0.51 |
Commercial and Residential Lending Segment
Core revenues,
Core costs
Core other
derivatives, (iii) the nonrecurrence of $4.6 million of transfer taxes related to the foreclosure of a residential conversion project in the second quarter of 2021 and (iv) a $3.1 million favorable change in realized gains (losses) on interest rate and foreign currency derivatives, net of related foreign currency gains (losses), associated with commercial loan activity, all partially offset by (v) the nonrecurrence of $7.5 million of gains on sales of RMBS in the second quarter of 2021.
Core revenues,
Core costs
investments.
Core other loss decreased
.
84
Property Segment
Core
For the Three Months Ended | |||||||||||||||||
September 30, 2021 | June 30, 2021 | Change | |||||||||||||||
Master Lease Portfolio | $ | 4,307 | $ | 4,306 | $ | 1 | |||||||||||
Medical Office Portfolio | 4,902 | 4,968 | (66) | ||||||||||||||
Woodstar I Portfolio | 6,449 | 5,846 | 603 | ||||||||||||||
Woodstar II Portfolio | 5,156 | 5,262 | (106) | ||||||||||||||
Other/Corporate | (749) | (798) | 49 | ||||||||||||||
Distributable Earnings | $ | 20,065 | $ | 19,584 | $ | 481 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | September 30, | | | | ||||
|
| 2020 |
| 2019 |
| Change | |||
Master Lease Portfolio | | $ | 4,273 | | $ | 4,311 | | $ | (38) |
Medical Office Portfolio | | | 3,979 | | | 5,994 | | | (2,015) |
Woodstar I Portfolio | | | 6,024 | | | 7,333 | | | (1,309) |
Woodstar II Portfolio | | | 6,354 | | | 6,245 | | | 109 |
Ireland Portfolio | | | — | | | 5,798 | | | (5,798) |
Other/Corporate | | | (725) | | | (954) | | | 229 |
Core Earnings | | $ | 19,905 | | $ | 28,727 | | $ | (8,822) |
Core revenues decreased
2021.
Core costs
Core other income (loss) decreased by $3.4 million in the third quarter of 2020 primarily due to an unfavorable change in realized gains (losses) on certain interest rate and foreign currency derivatives.
Investing and Servicing Segment
The Investing and Servicing Segment’s Core Earnings decreased by $47.3 million, from $64.4 million during the third quarter of 2019 to $17.1 million in the third quarter of 2020.2021. After making adjustments for the calculation of Core
Core revenues
Core costs
lower securitization volume.
Core other
85
in fair value due to the attainment of new servicing contracts. Derivatives include instruments which hedge interest rate risk and credit risk on our conduit loans.loans and CMBS investments. For GAAP purposes, the loans, CMBS and derivatives are accounted for at fair value, with all changes in fair value (realized or unrealized) recognized in earnings. The adjustments to CoreDistributable Earnings outlined above are also applied to the GAAP earnings of our unconsolidated entities. Core otherOther income (loss) decreased by $37.9$14.6 million in the third quarter of 20202021 primarily due to (i) the non-recurrence of $22.0 million of gains on sales of an operating property and CMBS in the third quarter of 2019 and (ii) a $15.9 million decrease in realized gains on conduit loans.
loans of $21.5 million, partially offset by a $5.0 million favorable change in realized gains (losses) on related interest rate derivatives.
2021.
Corporate
Core corporate costs and expenses decreased by $8.6$2.9 million, from $52.6$49.1 million during the thirdsecond quarter of 20192021 to $44.0$52.0 million in the third quarter of 20202021, primarily due to (i) a $5.1$2.5 million favorable change in realized gain (loss) on interest rate swaps which hedge a portion of our unsecured senior notes used to repay variable-rate secured financing, (ii) a $2.1 million decreaseincrease in interest expense principally on lower average outstanding balancesmainly due to our issuance of our unsecured senior notes and (iii) a $1.4 million decrease in loss on extinguishmentthe 2026 Senior Notes during the third quarter of debt.
86
Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019
The following table presents our summarized results of operations and reconciliation to CoreDistributable Earnings for the nine months ended September 30, 2021, by business segment (amounts in thousands, except per share data):
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 572,066 | $ | 63,432 | $ | 197,325 | $ | 154,492 | $ | — | $ | 987,315 | |||||||||||||||||||||||
Costs and expenses | (166,414) | (39,341) | (183,643) | (106,414) | (194,726) | (690,538) | |||||||||||||||||||||||||||||
Other income (loss) | 42,743 | (535) | 3,877 | 59,733 | (6,362) | 99,456 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 448,395 | 23,556 | 17,559 | 107,811 | (201,088) | 396,233 | |||||||||||||||||||||||||||||
Income tax benefit (provision) | 886 | 338 | — | (7,602) | — | (6,378) | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (10) | — | (14,682) | (18,873) | — | (33,565) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 449,271 | 23,894 | 2,877 | 81,336 | (201,088) | 356,290 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 14,682 | — | — | 14,682 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 5,427 | 1,163 | 142 | 3,179 | 19,448 | 29,359 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 19,107 | 19,107 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | (458) | — | (266) | (58) | — | (782) | |||||||||||||||||||||||||||||
Depreciation and amortization | 750 | 272 | 54,080 | 11,299 | — | 66,401 | |||||||||||||||||||||||||||||
Credit loss (reversal) provision, net | (12,957) | 594 | — | — | — | (12,363) | |||||||||||||||||||||||||||||
Interest income adjustment for securities | (2,332) | — | — | 11,405 | — | 9,073 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (739) | (739) | |||||||||||||||||||||||||||||
Income tax (provision) benefit associated with realized (gains) losses | (6,495) | — | — | 405 | — | (6,090) | |||||||||||||||||||||||||||||
Other non-cash items | 12 | — | (881) | 585 | 413 | 129 | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (24,079) | — | — | (44,037) | — | (68,116) | |||||||||||||||||||||||||||||
Securities | 20,134 | — | — | 2,545 | — | 22,679 | |||||||||||||||||||||||||||||
Derivatives | (64,050) | (1,068) | (9,342) | (9,452) | 13,251 | (70,661) | |||||||||||||||||||||||||||||
Foreign currency | 35,699 | 279 | 16 | 63 | — | 36,057 | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (5,415) | (75) | — | (235) | — | (5,725) | |||||||||||||||||||||||||||||
Sales of properties | (17,693) | — | — | (9,723) | — | (27,416) | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 44,625 | — | — | 44,436 | — | 89,061 | |||||||||||||||||||||||||||||
Realized credit loss | (7,757) | — | — | — | — | (7,757) | |||||||||||||||||||||||||||||
Securities | (32,042) | — | — | 2,639 | — | (29,403) | |||||||||||||||||||||||||||||
Derivatives | 5,533 | — | (104) | 5,060 | — | 10,489 | |||||||||||||||||||||||||||||
Foreign currency | 10,131 | (54) | (16) | (63) | — | 9,998 | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 9,468 | 75 | — | 2,001 | — | 11,544 | |||||||||||||||||||||||||||||
Sales of properties | 8,298 | — | — | 4,975 | — | 13,273 | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 416,070 | $ | 25,080 | $ | 61,188 | $ | 106,360 | $ | (149,608) | $ | 459,090 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 1.39 | $ | 0.08 | $ | 0.20 | $ | 0.36 | $ | (0.50) | $ | 1.53 |
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| |
| |
| |
| |
| | ||||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 553,351 | | $ | 61,737 | | $ | 191,680 | | $ | 137,655 | | $ | — | | $ | 944,423 |
Costs and expenses | |
| (222,862) | | | (48,453) | |
| (182,568) | | | (98,955) | | | (180,032) | |
| (732,870) |
Other income (loss) | |
| 39,808 | | | (2,453) | |
| (37,148) | | | 11,875 | | | 34,397 | |
| 46,479 |
Income (loss) before income taxes | |
| 370,297 | | | 10,831 | |
| (28,036) | | | 50,575 | | | (145,635) | |
| 258,032 |
Income tax (provision) benefit | |
| (15,535) | | | 3 | |
| — | | | 8,716 | | | — | |
| (6,816) |
Income attributable to non-controlling interests | |
| (10) | | | — | |
| (15,294) | | | (11,191) | | | — | |
| (26,495) |
Net income (loss) attributable to Starwood Property Trust, Inc. | |
| 354,752 | | | 10,834 | |
| (43,330) | | | 48,100 | | | (145,635) | |
| 224,721 |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 15,294 | | | — | | | — | |
| 15,294 |
Non-cash equity compensation expense | |
| 3,563 | | | 821 | | | 185 | | | 3,725 | | | 14,147 | | | 22,441 |
Management incentive fee | |
| — | | | — | | | — | | | — | | | 15,799 | | | 15,799 |
Acquisition and investment pursuit costs | | | 401 | | | — | | | (266) | | | (72) | | | — | | | 63 |
Depreciation and amortization | |
| 1,095 | | | 208 | | | 57,808 | | | 10,669 | | | — | | | 69,780 |
Credit loss provision, net | |
| 51,252 | | | 2,991 | | | — | | | — | | | — | | | 54,243 |
Interest income adjustment for securities | |
| 238 | | | — | | | — | | | 9,856 | | | — | | | 10,094 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (739) | | | (739) |
Income tax provision (benefit) associated with fair value adjustments | | | 1,612 | | | — | | | — | | | (955) | | | — | | | 657 |
Other non-cash items | | | 10 | | | — | | | (1,689) | | | 703 | | | 470 | | | (506) |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | |
| (56,895) | | | — | | | — | | | (22,805) | | | — | | | (79,700) |
Securities | |
| 8,814 | | | — | | | — | | | 36,026 | | | — | | | 44,840 |
Derivatives | |
| 8,816 | | | 1,260 | | | 32,593 | | | 21,986 | | | (23,509) | | | 41,146 |
Foreign currency | |
| 1,757 | | | 53 | | | 53 | | | (2) | | | — | | | 1,861 |
(Earnings) loss from unconsolidated entities | |
| (3,975) | | | 1,198 | | | — | | | (30,504) | | | — | | | (33,281) |
Recognition of Core realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | |
| 45,742 | | | (62) | | | — | | | 22,759 | | | — | | | 68,439 |
Securities | |
| — | | | — | | | — | | | (8,711) | | | — | | | (8,711) |
Derivatives | |
| (3,853) | | | 118 | | | (439) | | | (13,438) | | | — | | | (17,612) |
Foreign currency | |
| (5,441) | | | (147) | | | (53) | | | 2 | | | — | | | (5,639) |
Earnings (loss) from unconsolidated entities | |
| 2,772 | | | (813) | | | — | | | 17,502 | | | — | | | 19,461 |
Sales of properties | |
| — | | | — | | | — | | | (5,789) | | | — | | | (5,789) |
Core Earnings (Loss) | | $ | 410,660 | | $ | 16,461 | | $ | 60,156 | | $ | 89,052 | | $ | (139,467) | | $ | 436,862 |
Core Earnings (Loss) per Weighted Average Diluted Share | | $ | 1.39 | | $ | 0.06 | | $ | 0.20 | | $ | 0.30 | | $ | (0.47) | | $ | 1.48 |
87
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 553,351 | $ | 61,737 | $ | 191,680 | $ | 137,655 | $ | — | $ | 944,423 | |||||||||||||||||||||||
Costs and expenses | (222,862) | (48,453) | (182,568) | (98,955) | (180,032) | (732,870) | |||||||||||||||||||||||||||||
Other (loss) income | 39,808 | (2,453) | (37,148) | 11,875 | 34,397 | 46,479 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 370,297 | 10,831 | (28,036) | 50,575 | (145,635) | 258,032 | |||||||||||||||||||||||||||||
Income tax (provision) benefit | (15,535) | 3 | — | 8,716 | — | (6,816) | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (10) | — | (15,294) | (11,191) | — | (26,495) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 354,752 | 10,834 | (43,330) | 48,100 | (145,635) | 224,721 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 15,294 | — | — | 15,294 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 3,563 | 821 | 185 | 3,725 | 14,147 | 22,441 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 15,799 | 15,799 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 401 | — | (266) | (72) | — | 63 | |||||||||||||||||||||||||||||
Depreciation and amortization | 1,095 | 208 | 57,808 | 10,669 | — | 69,780 | |||||||||||||||||||||||||||||
Credit loss provision, net | 51,252 | 2,991 | — | — | — | 54,243 | |||||||||||||||||||||||||||||
Interest income adjustment for securities | 238 | — | — | 9,856 | — | 10,094 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (739) | (739) | |||||||||||||||||||||||||||||
Income tax provision (benefit) associated with fair value adjustments | 1,612 | — | — | (955) | — | 657 | |||||||||||||||||||||||||||||
Other non-cash items | 10 | — | (1,689) | 703 | 470 | (506) | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (56,895) | — | — | (22,805) | — | (79,700) | |||||||||||||||||||||||||||||
Securities | 8,814 | — | — | 36,026 | — | 44,840 | |||||||||||||||||||||||||||||
Derivatives | 8,816 | 1,260 | 32,593 | 21,986 | (23,509) | 41,146 | |||||||||||||||||||||||||||||
Foreign currency | 1,757 | 53 | 53 | (2) | — | 1,861 | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (3,975) | 1,198 | — | (30,504) | — | (33,281) | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 45,742 | (62) | — | 22,759 | — | 68,439 | |||||||||||||||||||||||||||||
Securities | — | — | — | (8,711) | — | (8,711) | |||||||||||||||||||||||||||||
Derivatives | (3,853) | 118 | (439) | (13,438) | — | (17,612) | |||||||||||||||||||||||||||||
Foreign currency | (5,441) | (147) | (53) | 2 | — | (5,639) | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 2,772 | (813) | — | 17,502 | — | 19,461 | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | (5,789) | — | (5,789) | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 410,660 | $ | 16,461 | $ | 60,156 | $ | 89,052 | $ | (139,467) | $ | 436,862 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 1.39 | $ | 0.06 | $ | 0.20 | $ | 0.30 | $ | (0.47) | $ | 1.48 |
The following table presents our summarized results of operations and reconciliation to Core Earnings for the nine months endedNine Months Ended September 30, 2019, by business segment (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| | |
| |
| |
| |
| | |||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 526,418 | | $ | 78,264 | | $ | 215,389 | | $ | 199,980 | | $ | 26 | | $ | 1,020,077 |
Costs and expenses | |
| (199,176) | | | (64,143) | |
| (204,813) | |
| (121,746) | | | (170,231) | |
| (760,109) |
Other income (loss) | |
| 20,086 | | | (8,669) | |
| (46,502) | |
| 111,941 | | | 30,186 | |
| 107,042 |
Income (loss) before income taxes | |
| 347,328 | | | 5,452 | |
| (35,926) | |
| 190,175 | | | (140,019) | |
| 367,010 |
Income tax (provision) benefit | |
| (4,778) | | | 746 | |
| (258) | |
| (4,090) | | | — | |
| (8,380) |
Income attributable to non-controlling interests | |
| (392) | | | — | |
| (16,322) | |
| (4,121) | | | — | |
| (20,835) |
Net income (loss) attributable to Starwood Property Trust, Inc. | |
| 342,158 | | | 6,198 | |
| (52,506) | |
| 181,964 | | | (140,019) | |
| 337,795 |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 16,322 | | | — | | | — | | | 16,322 |
Non-cash equity compensation expense | |
| 2,757 | | | 1,691 | | | 229 | | | 4,817 | | | 16,909 | | | 26,403 |
Management incentive fee | |
| — | | | — | | | — | | | — | | | 2,048 | | | 2,048 |
Acquisition and investment pursuit costs | | | (56) | | | 2 | | | (266) | | | (451) | | | (356) | | | (1,127) |
Depreciation and amortization | |
| 695 | | | 15 | | | 71,067 | | | 14,181 | | | — | | | 85,958 |
Credit loss provision, net | |
| 2,046 | | | 1,196 | | | — | | | — | | | — | | | 3,242 |
Interest income adjustment for securities | |
| (585) | | | — | | | — | | | 14,698 | | | — | | | 14,113 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (1,704) | | | (1,704) |
Other non-cash items | | | — | | | — | | | (565) | | | 699 | | | 470 | | | 604 |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | |
| (16,837) | | | — | | | — | | | (48,841) | | | — | | | (65,678) |
Securities | |
| 2,945 | | | — | | | — | | | (56,431) | | | — | | | (53,486) |
Derivatives | |
| (11,763) | | | 3,337 | | | 8,457 | | | 16,841 | | | (32,915) | | | (16,043) |
Foreign currency | |
| 17,025 | | | 102 | | | 7 | | | — | | | — | | | 17,134 |
(Earnings) loss from unconsolidated entities | |
| (8,576) | | | — | | | 42,538 | | | (3,601) | | | — | | | 30,361 |
Recognition of Core realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | |
| 7,180 | | | (985) | | | — | | | 49,719 | | | — | | | 55,914 |
Securities | |
| 970 | | | — | | | — | | | 11,702 | | | — | | | 12,672 |
Derivatives | |
| 1,800 | | | (1,396) | | | 2,257 | | | (17,114) | | | — | | | (14,453) |
Foreign currency | |
| (4,725) | | | (998) | | | (7) | | | 9 | | | — | | | (5,721) |
Earnings (loss) from unconsolidated entities | |
| 7,078 | | | — | | | (68,905) | | | 14,194 | | | — | | | (47,633) |
Sales of properties | |
| — | | | — | | | — | | | (7,297) | | | — | | | (7,297) |
Core Earnings (Loss) | | $ | 342,112 | | $ | 9,162 | | $ | 18,628 | | $ | 175,089 | | $ | (155,567) | | $ | 389,424 |
Core Earnings (Loss) per Weighted Average Diluted Share | | $ | 1.17 | | $ | 0.03 | | $ | 0.06 | | $ | 0.60 | | $ | (0.53) | | $ | 1.33 |
88
Commercial and Residential Lending Segment
Core revenues,
Core costs
Core other income increased by $22.3$4.2 million in the nine months of 2020,2021, primarily due to an increase(i) recognized losses of $38.6$39.5 million inon RMBS investments primarily due to higher than projected prepayment rates on the underlying residential loan securitization gains,loans, (ii) $4.6 million of transfer taxes relating to the foreclosure of a residential conversion project, both partially offset by unfavorable changes of $6.6(iii) a $20.8 million favorable change in realized gains (losses) on derivatives principally related to the residential loans securitized, $5.5and foreign currency transactions, (iv) an $8.3 million ingain on sale of a foreclosed property, (v) gains (losses)of $7.5 million on sales of other loansRMBS and investments and $4.3(vi) a $6.7 million increase in earnings from unconsolidated entities.entities primarily reflecting equity in higher distributable earnings of a residential mortgage originator.
Core revenues,
Core costs
professional fees.
Core other
Property Segment
Core
For the Nine Months Ended September 30, | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
Master Lease Portfolio | $ | 12,925 | $ | 12,811 | $ | 114 | |||||||||||
Medical Office Portfolio | 15,382 | 14,526 | 856 | ||||||||||||||
Woodstar I Portfolio | 18,633 | 17,129 | 1,504 | ||||||||||||||
Woodstar II Portfolio | 16,518 | 18,736 | (2,218) | ||||||||||||||
Other/Corporate | (2,270) | (3,046) | 776 | ||||||||||||||
Distributable Earnings | $ | 61,188 | $ | 60,156 | $ | 1,032 |
| | | | | | | | | |
| | For the Nine Months Ended | | | | ||||
| | September 30, | | | | ||||
|
| 2020 |
| 2019 |
| Change | |||
Master Lease Portfolio | | $ | 12,811 | | $ | 12,663 | | $ | 148 |
Medical Office Portfolio | | | 14,526 | | | 19,329 | | | (4,803) |
Woodstar I Portfolio | | | 17,129 | | | 22,489 | | | (5,360) |
Woodstar II Portfolio | | | 18,736 | | | 17,208 | | | 1,528 |
Ireland Portfolio | | | — | | | 18,801 | | | (18,801) |
Investment in unconsolidated entities | |
| — | |
| (68,905) | |
| 68,905 |
Other/Corporate | | | (3,046) | | | (2,957) | | | (89) |
Core Earnings | | $ | 60,156 | | $ | 18,628 | | $ | 41,528 |
Core revenues decreased
Portfolios.
Core costs
repairs and maintenance.
Core other
debt.
Core revenues decreased
transaction.
Core costs
properties held.
Core other
90
Income taxes, which principally relate to the taxable nature of this segment’s loan servicing and loan securitization businesses which are housed in TRSs, decreased $11.9increased $15.0 million from a provision of $4.1 million to a benefit of $7.8 million to a provision of $7.2 million due to tax lossestaxable income of those TRSs in the nine months of 2021 compared to losses in the nine months of 2020.
Core corporate costs and expenses decreased loss increased by $16.1$10.1 million, from $155.6$139.5 million during the nine months of 20192020 to $139.5$149.6 million in the nine months of 20202021, primarily due to (i) a $12.1$6.4 million favorable changeincrease in interest expense on higher average outstanding term loan and unsecured senior note balances and (ii) a $3.5 million decrease in realized gain (loss)gains on interest rate swaps which hedge a portion of our unsecured senior notes used to repay variable-rate secured financing, (ii) a $2.4 million decrease in loss on extinguishmentfinancing.
Credit Facilities
Shortly after the initial outbreak of the COVID-19 pandemic, we entered into agreements with certain of our secured credit facility lenders in our commercial lending portfolio to temporarily suspend credit mark provisions on certain of their portfolio assets in exchange for: (i) cash repayments; (ii) pledges of additional collateral; and (iii) reductions of available borrowings.
We are in frequent, consistent dialogue with the providers of our secured credit facilities regarding our management of their collateral assets in light of the impacts of the COVID-19 pandemic, including the determination of whether any extensions to these agreements are necessary as these temporary suspensions expire. Our in-house asset management team, along with an experienced team of workout professionals within our special servicer, are skilled in managing loans throughout cycles, which we believe will assist us in achieving maximum resolution on any assets impacted by the COVID-19 pandemic.
91
No such modifications or agreements were made with lenders on credit facilities related to our property, residential lending or infrastructure lending portfolios.
Sources of Liquidity
| | | | | | | | | |
|
| | |
| VIE |
| Excluding Investing | ||
| | GAAP | | Adjustments | | and Servicing VIEs | |||
Net cash provided by operating activities | | $ | 526,149 | | $ | (1,999) | | $ | 524,150 |
Cash Flows from Investing Activities: | | | | | | | | | |
Origination and purchase of loans held-for-investment | |
| (2,368,931) | |
| — | |
| (2,368,931) |
Proceeds from principal collections and sale of loans | |
| 1,792,542 | |
| — | |
| 1,792,542 |
Purchase and funding of investment securities | |
| (22,408) | |
| (265,469) | |
| (287,877) |
Proceeds from sales and collections of investment securities | |
| 75,897 | |
| 81,550 | |
| 157,447 |
Proceeds from sales of real estate | | | 23,805 | | | — | | | 23,805 |
Purchases and additions to properties and other assets | | | (17,923) | | | — | | | (17,923) |
Investment in unconsolidated entities | | | (3,133) | | | — | | | (3,133) |
Proceeds from sale of interest in unconsolidated entities | | | 10,313 | | | — | | | 10,313 |
Net cash flows from other investments and assets | |
| (60,118) | |
| — | |
| (60,118) |
Net cash used in investing activities | |
| (569,956) | |
| (183,919) | |
| (753,875) |
Cash Flows from Financing Activities: | | | | | | | | | |
Proceeds from borrowings | |
| 4,935,556 | |
| — | |
| 4,935,556 |
Principal repayments on and repurchases of borrowings | |
| (4,221,999) | |
| (13,950) | |
| (4,235,949) |
Payment of deferred financing costs | |
| (17,978) | |
| — | |
| (17,978) |
Proceeds from common stock issuances, net of offering costs | |
| 442 | |
| — | |
| 442 |
Payment of dividends | |
| (408,893) | |
| — | |
| (408,893) |
Contributions from non-controlling interests | | | 9,657 | | | — | |
| 9,657 |
Distributions to non-controlling interests | |
| (90,006) | |
| 2,472 | |
| (87,534) |
Purchase of treasury stock | | | (28,830) | | | — | | | (28,830) |
Issuance of debt of consolidated VIEs | |
| 24,376 | |
| (24,376) | |
| — |
Repayment of debt of consolidated VIEs | |
| (279,419) | |
| 279,419 | |
| — |
Distributions of cash from consolidated VIEs | |
| 57,174 | |
| (57,174) | |
| — |
Net cash provided by financing activities | |
| (19,920) | |
| 186,391 | |
| 166,471 |
Net decrease in cash, cash equivalents and restricted cash | |
| (63,727) | |
| 473 | |
| (63,254) |
Cash, cash equivalents and restricted cash, beginning of period | |
| 574,031 | |
| (1,221) | |
| 572,810 |
Effect of exchange rate changes on cash | |
| 902 | |
| — | |
| 902 |
Cash, cash equivalents and restricted cash, end of period | | $ | 511,206 | | $ | (748) | | $ | 510,458 |
GAAP | VIE Adjustments | Excluding Investing and Servicing VIEs | |||||||||||||||
Net cash used in operating activities | $ | (461,753) | $ | (409,435) | $ | (871,188) | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||||
Origination, purchase and funding of loans held-for-investment | (5,635,707) | (23,874) | (5,659,581) | ||||||||||||||
Proceeds from principal collections and sale of loans | 3,441,113 | — | 3,441,113 | ||||||||||||||
Purchase and funding of investment securities | — | (175,158) | (175,158) | ||||||||||||||
Proceeds from sales and collections of investment securities | 77,855 | 153,183 | 231,038 | ||||||||||||||
Proceeds from sales of real estate | 60,969 | — | 60,969 | ||||||||||||||
Purchases and additions to properties and other assets | (17,259) | — | (17,259) | ||||||||||||||
Net cash flows from other investments and assets | 55,598 | 308 | 55,906 | ||||||||||||||
Net cash used in investing activities | (2,017,431) | (45,541) | (2,062,972) | ||||||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||
Proceeds from borrowings | 11,654,848 | — | 11,654,848 | ||||||||||||||
Principal repayments on and repurchases of borrowings | (8,566,856) | (343) | (8,567,199) | ||||||||||||||
Payment of deferred financing costs | (46,196) | — | (46,196) | ||||||||||||||
Proceeds from common stock issuances, net of offering costs | 670 | — | 670 | ||||||||||||||
Payment of dividends | (414,977) | — | (414,977) | ||||||||||||||
Contributions from non-controlling interests | 5,590 | — | 5,590 | ||||||||||||||
Distributions to non-controlling interests | (35,235) | 231 | (35,004) | ||||||||||||||
Issuance of debt of consolidated VIEs | 69,399 | (69,399) | — | ||||||||||||||
Repayment of debt of consolidated VIEs | (608,435) | 608,435 | — | ||||||||||||||
Distributions of cash from consolidated VIEs | 83,785 | (83,785) | — | ||||||||||||||
Net cash provided by financing activities | 2,142,593 | 455,139 | 2,597,732 | ||||||||||||||
Net decrease in cash, cash equivalents and restricted cash | (336,591) | 163 | (336,428) | ||||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 722,162 | (772) | 721,390 | ||||||||||||||
Effect of exchange rate changes on cash | (1,783) | — | (1,783) | ||||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 383,788 | $ | (609) | $ | 383,179 |
Net cash provided by operating activities of $524.2$871.2 million during the nine months ended September 30, 20202021 related primarily to cash interest income of $408.2 million from our loans$1.1 billion in originations and $119.5 million from our investment securities and proceeds from salespurchases of loans held-for-sale, net of originationssales and purchases, of $272.3 million. Net rental income provided cash of $134.4 million and servicing fees provided cash of $30.4 million. Offsetting these cash inflows
92
wasprincipal collections, cash interest expense of $284.9$276.8 million, general and administrative expenses of $85.5$83.2 million, management fees of $56.8$74.8 million and a net change in operating assets and liabilities of $24.8$55.2 million.
Offsetting these cash outflows was cash interest income of $432.4 million from our loans and $115.5 million from our investment securities. Net rental income provided cash of $142.6 million and servicing fees provided cash of $44.3 million.
93
Our Investment Portfolio
investment portfolio by segment.
Commercial and Residential Lending Segment
Face Amount | Carrying Value | Asset Specific Financing | Net Investment | Unlevered Return on Asset | |||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||
First mortgages (1) | $ | 11,042,430 | $ | 10,984,155 | $ | 7,622,692 | $ | 3,361,463 | 5.6 | % | |||||||||||||||||||
Subordinated mortgages (2) | 82,916 | 81,159 | — | 81,159 | 9.9 | % | |||||||||||||||||||||||
Mezzanine loans (1) | 474,105 | 477,227 | — | 477,227 | 11.1 | % | |||||||||||||||||||||||
Residential loans, fair value option | 91,280 | 91,499 | 46,130 | 45,369 | 6.1 | % | |||||||||||||||||||||||
Other loans | 19,450 | 17,689 | — | 17,689 | 13.3 | % | |||||||||||||||||||||||
Loans held-for-sale, fair value option, residential | 1,758,342 | 1,813,458 | 1,394,585 | 418,873 | 4.2 | % | |||||||||||||||||||||||
RMBS, available-for-sale | 229,843 | 148,583 | 102,868 | 45,715 | 11.3 | % | |||||||||||||||||||||||
RMBS, fair value option | 119,472 | 215,152 | (3) | 37,672 | 177,480 | 10.6 | % | ||||||||||||||||||||||
CMBS, fair value option | 102,900 | 98,197 | (3) | 49,798 | 48,399 | 5.5 | % | ||||||||||||||||||||||
HTM debt securities (4) | 454,283 | 456,882 | 113,143 | 343,739 | 6.6 | % | |||||||||||||||||||||||
Credit loss allowance | — | (51,829) | — | (51,829) | |||||||||||||||||||||||||
Equity security | 12,313 | 12,067 | — | 12,067 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 45,129 | — | 45,129 | |||||||||||||||||||||||||
Properties, net | N/A | 124,691 | 49,328 | 75,363 | |||||||||||||||||||||||||
$ | 14,387,334 | $ | 14,514,059 | $ | 9,416,216 | $ | 5,097,843 | ||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
First mortgages (1) | $ | 8,977,365 | $ | 8,930,764 | $ | 5,892,684 | $ | 3,038,080 | 6.4 | % | |||||||||||||||||||
Subordinated mortgages (2) | 72,257 | 71,185 | — | 71,185 | 8.7 | % | |||||||||||||||||||||||
Mezzanine loans (1) | 619,352 | 620,319 | — | 620,319 | 11.5 | % | |||||||||||||||||||||||
Residential loans, fair value option | 86,796 | 90,684 | 58,885 | 31,799 | 5.8 | % | |||||||||||||||||||||||
Other loans | 33,626 | 30,284 | — | 30,284 | 9.8 | % | |||||||||||||||||||||||
Loans held-for-sale, fair value option, residential | 820,807 | 841,963 | 573,584 | 268,379 | 5.9 | % | |||||||||||||||||||||||
RMBS, available-for-sale | 252,738 | 167,349 | 110,724 | 56,625 | 11.0 | % | |||||||||||||||||||||||
RMBS, fair value option | 142,288 | 235,997 | (3) | 30,267 | 205,730 | 6.3 | % | ||||||||||||||||||||||
CMBS, fair value option | 102,900 | 96,885 | (3) | 25,313 | 71,572 | 5.6 | % | ||||||||||||||||||||||
HTM debt securities (4) | 505,247 | 505,673 | 84,233 | 421,440 | 6.8 | % | |||||||||||||||||||||||
Credit loss allowance | — | (72,360) | — | (72,360) | |||||||||||||||||||||||||
Equity security | 12,497 | 11,247 | — | 11,247 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 54,407 | — | 54,407 | |||||||||||||||||||||||||
Properties, net | N/A | 103,896 | 48,863 | 55,033 | |||||||||||||||||||||||||
$ | 11,625,873 | $ | 11,688,293 | $ | 6,824,553 | $ | 4,863,740 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Unlevered | |
|
| Face |
| Carrying |
| Asset Specific |
| Net |
| Return on | | ||||
| | Amount | | Value | | Financing | | Investment | | Asset | | ||||
September 30, 2020 | | | | | | | | | | | | | | | |
First mortgages (1) | | $ | 8,547,835 | | $ | 8,524,192 | | $ | 5,555,294 | | $ | 2,968,898 |
| 6.3 | % |
Subordinated mortgages | |
| 70,979 | |
| 69,835 | |
| — | |
| 69,835 |
| 8.7 | % |
Mezzanine loans (1) | |
| 587,223 | |
| 588,116 | |
| — | |
| 588,116 |
| 11.7 | % |
Residential loans, fair value option | | | 249,323 | |
| 256,407 | |
| 170,063 | |
| 86,344 | | 6.0 | % |
Other loans | | | 34,043 | |
| 30,548 | |
| — | |
| 30,548 |
| 9.9 | % |
Loans held-for-sale, fair value option, residential | | | 742,106 | |
| 747,654 | |
| 473,041 | |
| 274,613 |
| 6.0 | % |
RMBS, available-for-sale | |
| 260,260 | |
| 170,270 | |
| 110,478 | |
| 59,792 |
| 11.2 | % |
RMBS, fair value option | | | 275,787 | | | 373,682 | (2) | | 75,118 | | | 298,564 | | 8.4 | % |
CMBS, fair value option | | | 102,900 | | | 96,869 | (2) | | 25,313 | | | 71,556 | | 6.3 | % |
HTM debt securities (3) | |
| 505,247 | |
| 504,936 | |
| 96,716 | |
| 408,220 |
| 6.8 | % |
Credit loss allowance | |
| — | |
| (99,048) | |
| — | |
| (99,048) |
| | |
Equity security | |
| 11,805 | |
| 10,058 | |
| — | |
| 10,058 |
| | |
Investment in unconsolidated entities | |
| N/A | |
| 50,850 | |
| — | |
| 50,850 |
| | |
Properties, net | | | N/A | |
| 27,123 | |
| — | |
| 27,123 | | | |
| | $ | 11,387,508 | | $ | 11,351,492 | | $ | 6,506,023 | | $ | 4,845,469 | | | |
| | | | | | | | | | | | | | | |
December 31, 2019 | | | | | | | | | | | | | | | |
First mortgages (1) | | $ | 7,961,494 | | $ | 7,926,732 | | $ | 4,715,244 | | $ | 3,211,488 |
| 6.4 | % |
Subordinated mortgages | |
| 77,055 | |
| 75,724 | |
| — | |
| 75,724 |
| 9.5 | % |
Mezzanine loans (1) | |
| 484,408 | |
| 484,164 | |
| — | |
| 484,164 |
| 12.2 | % |
Residential loans, fair value option | | | 654,925 | |
| 671,572 | |
| 425,423 | |
| 246,149 | | 5.9 | % |
Other loans | | | 66,525 | |
| 62,555 | |
| — | |
| 62,555 | | 8.9 | % |
Loans held-for-sale, fair value option, residential | | | 587,144 | |
| 605,384 | |
| 454,223 | |
| 151,161 |
| 5.9 | % |
Credit loss allowance, loans | | | — | |
| (33,415) | |
| — | |
| (33,415) | | | |
RMBS, available-for-sale | |
| 278,853 | |
| 189,576 | |
| 102,073 | |
| 87,503 |
| 12.3 | % |
RMBS, fair value option | |
| 87,397 | | | 147,034 | (2) | | 32,292 | | | 114,742 |
| 10.2 | % |
CMBS, fair value option | |
| 118,249 | | | 118,215 | (2) | | 58,801 | | | 59,414 |
| 5.5 | % |
HTM debt securities (3) | |
| 527,338 | |
| 525,485 | |
| 178,880 | |
| 346,605 |
| 7.1 | % |
Equity security | |
| 12,119 | |
| 12,664 | |
| — | |
| 12,664 |
| | |
Investment in unconsolidated entities | |
| N/A | |
| 46,921 | |
| — | |
| 46,921 |
| | |
Properties, net | | | N/A | |
| 26,834 | |
| — | |
| 26,834 | | | |
| | $ | 10,855,507 | | $ | 10,859,445 | | $ | 5,966,936 | | $ | 4,892,509 | | | |
94
(2)
Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
| | | | | |
Collateral Property Type |
| September 30, 2020 |
| December 31, 2019 | |
Office |
| 34.1 | % | 40.2 | % |
Hotel |
| 22.4 | % | 20.6 | % |
Multifamily |
| 14.4 | % | 12.3 | % |
Mixed Use | | 8.4 | % | 7.1 | % |
Residential |
| 8.2 | % | 8.7 | % |
Retail |
| 2.8 | % | 3.5 | % |
Industrial |
| 1.8 | % | 0.6 | % |
Other | | 7.9 | % | 7.0 | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Geographic Location |
| September 30, 2020 |
| December 31, 2019 | |
U.S. Regions: |
| | | | |
North East |
| 24.5 | % | 27.5 | % |
West |
| 18.5 | % | 22.2 | % |
South West |
| 10.9 | % | 10.7 | % |
Mid Atlantic |
| 9.5 | % | 8.3 | % |
South East |
| 8.3 | % | 7.9 | % |
Midwest |
| 4.6 | % | 4.1 | % |
International: |
| | | | |
Europe/Australia |
| 20.8 | % | 16.2 | % |
Bahamas/Bermuda |
| 2.9 | % | 3.1 | % |
|
| 100.0 | % | 100.0 | % |
95
Collateral Property Type | September 30, 2021 | December 31, 2020 | ||||||||||||
Office | 29.6 | % | 35.2 | % | ||||||||||
Multifamily | 23.3 | % | 16.1 | % | ||||||||||
Hotel | 19.7 | % | 21.6 | % | ||||||||||
Mixed Use | 13.1 | % | 8.2 | % | ||||||||||
Residential | 3.0 | % | 6.7 | % | ||||||||||
Industrial | 3.7 | % | 3.0 | % | ||||||||||
Retail | 2.5 | % | 2.8 | % | ||||||||||
Other | 5.1 | % | 6.4 | % | ||||||||||
100.0 | % | 100.0 | % |
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
U.S. Regions: | ||||||||||||||
North East | 18.9 | % | 22.7 | % | ||||||||||
West | 16.8 | % | 19.0 | % | ||||||||||
South West | 12.4 | % | 11.1 | % | ||||||||||
South East | 10.5 | % | 7.3 | % | ||||||||||
Mid Atlantic | 10.7 | % | 9.5 | % | ||||||||||
Midwest | 4.4 | % | 4.4 | % | ||||||||||
International: | ||||||||||||||
United Kingdom | 18.3 | % | 17.5 | % | ||||||||||
Other Europe | 3.4 | % | 4.7 | % | ||||||||||
Bahamas/Bermuda | 2.5 | % | 2.7 | % | ||||||||||
Australia | 2.1 | % | 1.1 | % | ||||||||||
100.0 | % | 100.0 | % |
Infrastructure Lending Segment
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Unlevered | |
|
| Face |
| Carrying |
| Asset Specific |
| Net |
| Return on | | ||||
| | Amount | | Value | | Financing | | Investment | | Asset | | ||||
September 30, 2020 | | | | | | | | | | | | | | | |
First priority infrastructure loans and HTM securities | | $ | 1,630,855 | | $ | 1,601,005 | | $ | 1,243,001 | | $ | 358,004 |
| 4.7 | % |
Credit loss allowance | | | N/A | | | (17,124) | | | — | | | (17,124) | | | |
Investment in unconsolidated entities | | | N/A | | | 24,664 | | | — | | | 24,664 | | | |
| | $ | 1,630,855 | | $ | 1,608,545 | | $ | 1,243,001 | | $ | 365,544 | | | |
| | | | | | | | | | | | | | | |
December 31, 2019 | | | | | | | | | | | | | | | |
First priority infrastructure loans and HTM securities | | $ | 1,474,052 | | $ | 1,442,601 | | $ | 1,121,065 | | $ | 321,536 |
| 6.4 | % |
Loans held-for-sale, infrastructure | |
| 121,271 | |
| 119,724 | |
| 96,001 | |
| 23,723 |
| 5.1 | % |
Credit loss allowance | | | N/A | | | (196) | | | — | | | (196) | | | |
Investment in unconsolidated entities | | | N/A | | | 25,862 | | | — | | | 25,862 | | | |
| | $ | 1,595,323 | | $ | 1,587,991 | | $ | 1,217,066 | | $ | 370,925 | | | |
Face Amount | Carrying Value | Asset Specific Financing | Net Investment | Unlevered Return on Asset | |||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||
First priority infrastructure loans and HTM securities | $ | 1,766,259 | $ | 1,734,303 | $ | 1,239,412 | $ | 494,891 | 4.9 | % | |||||||||||||||||||
Loans held-for-sale, infrastructure | 84,457 | 84,253 | 70,891 | 13,362 | 2.8 | % | |||||||||||||||||||||||
Credit loss allowance | N/A | (12,133) | — | (12,133) | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 25,170 | — | 25,170 | |||||||||||||||||||||||||
$ | 1,850,716 | $ | 1,831,593 | $ | 1,310,303 | $ | 521,290 | ||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
First priority infrastructure loans and HTM securities | $ | 1,488,614 | $ | 1,458,880 | $ | 1,140,608 | $ | 318,272 | 5.2 | % | |||||||||||||||||||
Loans held-for-sale, infrastructure | 120,900 | 120,540 | 100,155 | 20,385 | 3.5 | % | |||||||||||||||||||||||
Credit loss allowance | N/A | (10,759) | — | (10,759) | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 25,095 | — | 25,095 | |||||||||||||||||||||||||
$ | 1,609,514 | $ | 1,593,756 | $ | 1,240,763 | $ | 352,993 |
| | | | | |
Collateral Type |
| September 30, 2020 |
| December 31, 2019 | |
Natural gas power |
| 68.4 | % | 72.6 | % |
Midstream |
| 20.9 | % | 12.8 | % |
Renewable power |
| 7.2 | % | 10.6 | % |
Other thermal power | | 3.5 | % | 4.0 | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Geographic Location | | September 30, 2020 | | December 31, 2019 | |
U.S. Regions: | | | | | |
North East |
| 42.1 | % | 43.9 | % |
Midwest |
| 21.8 | % | 25.5 | % |
South West |
| 16.2 | % | 12.6 | % |
South East | | 9.0 | % | 4.8 | % |
West | | 3.6 | % | 4.2 | % |
Mid-Atlantic | | 3.6 | % | 4.0 | % |
International: |
| | | | |
Mexico |
| 2.7 | % | 2.9 | % |
Other |
| 1.0 | % | 2.1 | % |
|
| 100.0 | % | 100.0 | % |
96
Collateral Type | September 30, 2021 | December 31, 2020 | ||||||||||||
Natural gas power | 62.5 | % | 65.8 | % | ||||||||||
Midstream/downstream oil & gas | 25.3 | % | 21.9 | % | ||||||||||
Renewable power | 6.5 | % | 9.0 | % | ||||||||||
Other thermal power | 5.7 | % | 3.3 | % | ||||||||||
100.0 | % | 100.0 | % |
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
U.S. Regions: | ||||||||||||||
North East | 42.2 | % | 43.1 | % | ||||||||||
Midwest | 22.5 | % | 20.8 | % | ||||||||||
South West | 13.2 | % | 15.3 | % | ||||||||||
South East | 9.4 | % | 9.6 | % | ||||||||||
West | 5.7 | % | 4.3 | % | ||||||||||
Mid-Atlantic | 1.5 | % | 3.2 | % | ||||||||||
Other | 2.5 | % | — | % | ||||||||||
International: | ||||||||||||||
Mexico | 2.3 | % | 2.7 | % | ||||||||||
Other | 0.7 | % | 1.0 | % | ||||||||||
100.0 | % | 100.0 | % |
Property Segment
| | | | | | |
|
| September 30, 2020 |
| December 31, 2019 | ||
Properties, net | | $ | 1,983,124 | | $ | 2,029,024 |
Lease intangibles, net | |
| 39,978 | |
| 44,986 |
| | $ | 2,023,102 | | $ | 2,074,010 |
September 30, 2021 | December 31, 2020 | ||||||||||
Properties, net | $ | 1,928,853 | $ | 1,969,414 | |||||||
Lease intangibles, net | 34,399 | 38,511 | |||||||||
$ | 1,963,252 | $ | 2,007,925 |
The following table sets forth our net investment and other information regarding the Property Segment’s properties and lease intangibles as of September 30, 20202021 (dollars in thousands):
| | | | | | | | | | | | | | |
|
| |
| Asset |
| |
| |
| Weighted Average | ||||
| | Carrying | | Specific | | Net | | Occupancy | | Remaining | ||||
| | Value | | Financing | | Investment | | Rate | | Lease Term | ||||
Office—Medical Office Portfolio | | $ | 760,098 | | $ | 591,853 | | $ | 168,245 | | 93.2 | % | | 6.1 years |
Multifamily residential—Woodstar I Portfolio | | | 634,017 | | | 572,202 | | | 61,815 | | 98.2 | % | | 0.5 years |
Multifamily residential—Woodstar II Portfolio | | | 607,695 | | | 437,037 | | | 170,658 | | 99.3 | % | | 0.5 years |
Retail—Master Lease Portfolio | | | 343,790 | |
| 192,639 | |
| 151,151 | | 100.0 | % | | 21.6 years |
Subtotal—undepreciated carrying value | | | 2,345,600 | | | 1,793,731 | | | 551,869 | | | | | |
Accumulated depreciation and amortization | ��� | | (322,498) | | | — | | | (322,498) | | | | | |
Net carrying value | | $ | 2,023,102 | | $ | 1,793,731 | | $ | 229,371 | | | | | |
Carrying Value | Asset Specific Financing | Net Investment | Occupancy Rate | Weighted Average Remaining Lease Term | |||||||||||||||||||||||||
Office—Medical Office Portfolio | $ | 762,071 | $ | 593,852 | $ | 168,219 | 93.9 | % | 5.4 years | ||||||||||||||||||||
Multifamily residential—Woodstar I Portfolio | 640,886 | 573,368 | 67,518 | 98.1 | % | 0.5 years | |||||||||||||||||||||||
Multifamily residential—Woodstar II Portfolio | 611,819 | 512,870 | 98,949 | 97.8 | % | 0.5 years | |||||||||||||||||||||||
Retail—Master Lease Portfolio | 343,790 | 192,963 | 150,827 | 100.0 | % | 20.6 years | |||||||||||||||||||||||
Subtotal—undepreciated carrying value | 2,358,566 | 1,873,053 | 485,513 | ||||||||||||||||||||||||||
Accumulated depreciation and amortization | (395,313) | — | (395,313) | ||||||||||||||||||||||||||
Net carrying value | $ | 1,963,253 | $ | 1,873,053 | $ | 90,200 |
| | | | | |
Geographic Location | | September 30, 2020 | | December 31, 2019 | |
South East | | 62.0 | % | 62.0 | % |
South West |
| 10.3 | % | 10.3 | % |
Midwest |
| 10.1 | % | 10.1 | % |
North East |
| 9.7 | % | 9.7 | % |
West |
| 7.9 | % | 7.9 | % |
|
| 100.0 | % | 100.0 | % |
97
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
South East | 62.2 | % | 62.1 | % | ||||||||||
South West | 10.3 | % | 10.3 | % | ||||||||||
Midwest | 10.0 | % | 10.1 | % | ||||||||||
North East | 9.6 | % | 9.6 | % | ||||||||||
West | 7.9 | % | 7.9 | % | ||||||||||
100.0 | % | 100.0 | % |
Investing and Servicing Segment
Face Amount | Carrying Value | Asset Specific Financing | Net Investment | ||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||
CMBS, fair value option | $ | 2,678,039 | $ | 1,128,921 | (1) | $ | 394,886 | (2) | $ | 734,035 | |||||||||||||||||||
Intangible assets - servicing rights | N/A | 55,374 | (3) | — | 55,374 | ||||||||||||||||||||||||
Lease intangibles, net | N/A | 12,362 | — | 12,362 | |||||||||||||||||||||||||
Loans held-for-sale, fair value option, commercial | 278,736 | 285,808 | 191,947 | 93,861 | |||||||||||||||||||||||||
Loans held-for-investment | 781 | 781 | — | 781 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 38,239 | (4) | — | 38,239 | ||||||||||||||||||||||||
Properties, net | N/A | 175,318 | 176,722 | (1,404) | |||||||||||||||||||||||||
$ | 2,957,556 | $ | 1,696,803 | $ | 763,555 | $ | 933,248 | ||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
CMBS, fair value option | $ | 2,652,459 | $ | 1,112,145 | (1) | $ | 360,221 | (2) | $ | 751,924 | |||||||||||||||||||
Intangible assets - servicing rights | N/A | 54,578 | (3) | — | 54,578 | ||||||||||||||||||||||||
Lease intangibles, net | N/A | 15,548 | — | 15,548 | |||||||||||||||||||||||||
Loans held-for-sale, fair value option, commercial | 90,789 | 90,332 | 53,040 | 37,292 | |||||||||||||||||||||||||
Loans held-for-investment | 1,008 | 1,008 | — | 1,008 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 44,664 | (4) | — | 44,664 | ||||||||||||||||||||||||
Properties, net | N/A | 197,843 | 192,839 | 5,004 | |||||||||||||||||||||||||
$ | 2,744,256 | $ | 1,516,118 | $ | 606,100 | $ | 910,018 |
| | | | | | | | | | | | | |
|
| | |
| | |
| Asset |
| | |
| |
| | Face | | Carrying | | Specific | | Net |
| ||||
| | Amount | | Value | | Financing | | Investment |
| ||||
September 30, 2020 | | | | | | | | | | | | | |
CMBS, fair value option | | $ | 2,618,530 | | $ | 1,097,322 | (1) | $ | 318,443 | (2) | $ | 778,879 | |
Intangible assets - servicing rights | |
| N/A | |
| 52,770 | (3) |
| — | |
| 52,770 | |
Lease intangibles, net | | | N/A | | | 16,548 | | | — | | | 16,548 | |
Loans held-for-sale, fair value option, commercial | |
| 266,370 | |
| 265,019 | |
| 126,419 | |
| 138,600 | |
Loans held-for-investment | | | 1,081 | | | 1,081 | | | — | | | 1,081 | |
Investment in unconsolidated entities | | | N/A | | | 45,236 | (4) | | — | | | 45,236 | |
Properties, net | |
| N/A | |
| 197,575 | |
| 169,193 | |
| 28,382 | |
| | $ | 2,885,981 | | $ | 1,675,551 | | $ | 614,055 | | $ | 1,061,496 | |
December 31, 2019 | | | | | | | | | | | | | |
CMBS, fair value option | | $ | 2,897,654 | | $ | 1,177,148 | (1) | $ | 300,705 | | $ | 876,443 | |
Intangible assets - servicing rights | |
| N/A | |
| 43,164 | (3) |
| — | |
| 43,164 | |
Lease intangibles, net | | | N/A | | | 20,060 | | | — | |
| 20,060 | |
Loans held-for-sale, fair value option, commercial | |
| 160,635 | |
| 159,238 | |
| 85,873 | |
| 73,365 | |
Loans held-for-investment | | | 1,294 | | | 1,294 | | | — | | | 1,294 | |
Investment in unconsolidated entities | | | N/A | | | 32,183 | (4) | | — | | | 32,183 | |
Properties, net | |
| N/A | |
| 210,582 | |
| 187,929 | |
| 22,653 | |
| | $ | 3,059,583 | | $ | 1,643,669 | | $ | 574,507 | | $ | 1,069,162 | |
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Our REIS Equity Portfolio, as described in Note 6 to the Condensed Consolidated Financial Statements, had the following characteristics based on carrying values of $198.8$172.8 million and $214.9$198.2 million as of September 30, 20202021 and December 31, 2019,2020, respectively:
| | | | | |
Property Type | | September 30, 2020 | | December 31, 2019 | |
Office | | 50.0 | % | 52.7 | % |
Retail |
| 30.5 | % | 28.8 | % |
Mixed Use |
| 6.9 | % | 5.8 | % |
Self-storage |
| 6.2 | % | 3.9 | % |
Multifamily |
| 4.2 | % | 6.5 | % |
Hotel | | 2.2 | % | 2.3 | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Geographic Location | | September 30, 2020 | | December 31, 2019 | |
South West |
| 24.7 | % | 22.6 | % |
North East |
| 24.4 | % | 22.0 | % |
South East |
| 15.6 | % | 22.6 | % |
West |
| 15.0 | % | 13.5 | % |
Mid Atlantic |
| 11.8 | % | 8.4 | % |
Midwest |
| 8.5 | % | 10.9 | % |
|
| 100.0 | % | 100.0 | % |
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Property Type | September 30, 2021 | December 31, 2020 | ||||||||||||
Office | 45.1 | % | 50.6 | % | ||||||||||
Retail | 33.1 | % | 29.9 | % | ||||||||||
Mixed Use | 7.9 | % | 6.9 | % | ||||||||||
Self-storage | 7.0 | % | 6.2 | % | ||||||||||
Multifamily | 4.8 | % | 4.2 | % | ||||||||||
Hotel | 2.1 | % | 2.2 | % | ||||||||||
100.0 | % | 100.0 | % |
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
North East | 28.1 | % | 24.8 | % | ||||||||||
South West | 17.4 | % | 25.1 | % | ||||||||||
South East | 16.6 | % | 15.4 | % | ||||||||||
West | 16.2 | % | 14.8 | % | ||||||||||
Mid Atlantic | 12.7 | % | 11.5 | % | ||||||||||
Midwest | 9.0 | % | 8.4 | % | ||||||||||
100.0 | % | 100.0 | % |
New Credit Facilities and Amendments
2020.
Current Maturity | Extended Maturity (a) | Weighted Average Pricing | Pledged Asset Carrying Value | Maximum Facility Size | Outstanding Balance | Approved but Undrawn Capacity (b) | Unallocated Financing Amount (c) | ||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements: | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Loans | Mar 2022 to Jul 2026 | (d) | Jun 2025 to Mar 2029 | (d) | (e) | $ | 7,750,853 | $ | 9,980,380 | (f) | $ | 5,294,281 | $ | 213,935 | $ | 4,472,164 | |||||||||||||||||||||||||||||||
Residential Loans | Jun 2022 to Oct 2023 | N/A | LIBOR + 2.01% | 1,755,161 | 2,550,000 | 1,440,018 | 28,719 | 1,081,263 | |||||||||||||||||||||||||||||||||||||||
Infrastructure Loans | Sep 2024 | Sep 2026 | LIBOR + 2.00% | 467,921 | 650,000 | 368,442 | — | 281,558 | |||||||||||||||||||||||||||||||||||||||
Conduit Loans | Feb 2022 to Jun 2024 | Feb 2023 to Jun 2025 | LIBOR + 1.99% | 259,155 | 350,000 | 192,829 | — | 157,171 | |||||||||||||||||||||||||||||||||||||||
CMBS/RMBS | Dec 2021 to May 2031 | (g) | Sep 2022 to Nov 2031 | (g) | (h) | 1,193,808 | 835,850 | 709,340 | (i) | — | 126,510 | ||||||||||||||||||||||||||||||||||||
Total Repurchase Agreements | 11,426,898 | 14,366,230 | 8,004,910 | 242,654 | 6,118,666 | ||||||||||||||||||||||||||||||||||||||||||
Other Secured Financing: | |||||||||||||||||||||||||||||||||||||||||||||||
Borrowing Base Facility | Apr 2022 | Apr 2024 | LIBOR + 2.25% | 73,502 | 650,000 | (j) | 2,000 | 53,125 | 594,875 | ||||||||||||||||||||||||||||||||||||||
Commercial Financing Facility | Mar 2022 | Mar 2029 | GBP LIBOR + 1.75% | 177,424 | 142,872 | 142,872 | — | — | |||||||||||||||||||||||||||||||||||||||
Residential Financing Facility | Sep 2022 | Sep 2025 | 3.50% | 149,604 | 250,000 | 2,018 | 103,229 | 144,753 | |||||||||||||||||||||||||||||||||||||||
Infrastructure Financing Facilities | Jul 2022 to Oct 2022 | Oct 2024 to Jul 2027 | LIBOR + 2.03% | 688,488 | 1,250,000 | 544,582 | — | 705,418 | |||||||||||||||||||||||||||||||||||||||
Property Mortgages - Fixed rate | Nov 2024 to Aug 2052 | (k) | N/A | 4.03% | 1,254,141 | 1,154,763 | 1,154,763 | — | — | ||||||||||||||||||||||||||||||||||||||
Property Mortgages - Variable rate | Nov 2021 to Jul 2030 | N/A | (l) | 898,634 | 969,790 | 945,311 | — | 24,479 | |||||||||||||||||||||||||||||||||||||||
Term Loan and Revolver | (m) | N/A | (m) | N/A | (m) | 940,750 | 790,750 | 150,000 | — | ||||||||||||||||||||||||||||||||||||||
STWD 2019-FL1 CLO | Jul 2038 | N/A | LIBOR + 1.34% | 1,103,259 | 936,375 | 936,375 | — | — | |||||||||||||||||||||||||||||||||||||||
STWD 2021-FL2 CLO | Apr 2038 | N/A | LIBOR + 1.50% | 1,279,245 | 1,077,375 | 1,077,375 | — | — | |||||||||||||||||||||||||||||||||||||||
STWD 2021-SIF1 CLO | Apr 2032 | N/A | LIBOR + 1.81% | 510,592 | 410,000 | 410,000 | — | — | |||||||||||||||||||||||||||||||||||||||
STWD 2021-HTS SASB | Apr 2034 | N/A | LIBOR + 2.22% | 230,562 | 210,091 | 210,091 | — | — | |||||||||||||||||||||||||||||||||||||||
Total Other Secured Financing | 6,365,451 | 7,992,016 | 6,216,137 | 306,354 | 1,469,525 | ||||||||||||||||||||||||||||||||||||||||||
$ | 17,792,349 | $ | 22,358,246 | $ | 14,221,047 | $ | 549,008 | $ | 7,588,191 | ||||||||||||||||||||||||||||||||||||||
Unamortized net discount | (14,603) | ||||||||||||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | (90,162) | ||||||||||||||||||||||||||||||||||||||||||||||
$ | 14,116,282 |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Pledged | | | | | | | Approved | | | ||||
| | | | | | Weighted | | Asset | | Maximum | | | | but | | Unallocated | |||||
| | Current | | Extended | | Average | | Carrying | | Facility | | Outstanding | | Undrawn | | Financing | |||||
|
| Maturity |
| Maturity (a) |
| Pricing |
| Value |
| Size |
| Balance |
| Capacity (b) |
| Amount (c) | |||||
Repurchase Agreements: | | | | | | | | | | | | | | | | | | | | | |
Commercial Loans | | May 2021 to Aug 2025 | (d) | May 2023 to Mar 2029 | (d) | (e) | | $ | 6,643,722 | | $ | 8,747,538 | (f) | $ | 4,556,665 | | $ | 71,355 | | $ | 4,119,518 |
Residential Loans | | Jun 2022 | | N/A | | LIBOR + 2.64% | | | 37,046 | | | 400,000 | | | 23,866 | | | — | | | 376,134 |
Infrastructure Loans | | Feb 2022 | | N/A | | LIBOR + 2.00% | | | 244,862 | | | 500,000 | | | 206,288 | | | — | | | 293,712 |
Conduit Loans | | Feb 2021 to Jun 2023 | | Feb 2022 to Jun 2024 | | LIBOR + 1.93% | | | 171,497 | | | 350,000 | | | 127,162 | | | — | | | 222,838 |
CMBS/RMBS | | Oct 2020 to Dec 2029 | (g) | Aug 2021 to Jun 2030 | (g) | (h) | | | 1,155,313 | | | 750,544 | | | 634,791 | (i) | | — | | | 115,753 |
Total Repurchase Agreements | | | | | | | | | 8,252,440 | | | 10,748,082 | | | 5,548,772 | | | 71,355 | | | 5,127,955 |
Other Secured Financing: | | | | | | | | | | | | | | | | | | | | | |
Borrowing Base Facility | | Apr 2022 | | Apr 2024 | | LIBOR + 2.25% | | | 50,194 | | | 650,000 | (j) | | 37,594 | | | — | | | 612,406 |
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 | | | — | | | — | | | 250,000 |
Infrastructure Acquisition Facility | | Sep 2021 | | Sep 2022 | | (k) | | | 710,572 | | | 701,370 | | | 572,382 | | | — | | | 128,988 |
Infrastructure Financing Facilities | | Jul 2022 to Oct 2022 | | Oct 2024 to Jul 2027 | | LIBOR + 2.11% | | | 583,319 | | | 1,250,000 | | | 464,487 | | | — | | | 785,513 |
Property Mortgages - Fixed rate | | Nov 2024 to Aug 2052 | (l) | N/A | | 3.81% | | | 1,288,513 | | | 1,077,800 | | | 1,077,800 | | | — | | | — |
Property Mortgages - Variable rate | | Nov 2021 to Jul 2030 | | N/A | | (m) | | | 926,495 | | | 927,300 | | | 908,906 | | | — | | | 18,394 |
Term Loan and Revolver | | (n) | | N/A | | (n) | | | N/A | (n) | | 516,000 | | | 396,000 | | | 120,000 | | | — |
FHLB | | Feb 2021 | | N/A | | 1.99% | | | 948,409 | | | 1,600,000 | | | 619,500 | | | — | | | 980,500 |
Collateralized Loan Obligation | | Jul 2038 | | N/A | | LIBOR + 1.34% | | | 1,099,558 | | | 936,375 | | | 936,375 | | | — | | | — |
Total Other Secured Financing | | | | | | | | | 5,702,137 | | | 7,985,566 | | | 5,089,765 | | | 120,000 | | | 2,775,801 |
| | | | | | | | $ | 13,954,577 | | $ | 18,733,648 | | $ | 10,638,537 | | $ | 191,355 | | $ | 7,903,756 |
Unamortized net discount | | | | | | | | | | | | | | | (9,908) | | | | | | |
Unamortized deferred financing costs | | | | | | | | | | | | | | | (82,806) | | | | | | |
| | | | | | | | | | | | | | $ | 10,545,823 | | | | | | |
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(m)Consists of: (i) a $790.8 million term loan facility that matures in July 2026, of which $392.0 million (the "Initial Borrowings") has an annual interest rate of LIBOR + 2.50% and $398.8 million (the "Incremental Borrowings") has an annual interest rate of LIBOR + 3.25%, subject to a 0.75% LIBOR floor, and (ii) a $150.0 million revolving credit facility that matures in April 2026 with an annual interest rate of SOFR + 2.50%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $4.7 billion as of September 30, 2021. |
Refer to Note 9 of the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our secured financing arrangements.
Quarter Ended | Quarter-End Balance | Weighted-Average Balance During Quarter | Variance | Explanations for Significant Variances | ||||||||||||||||||||||
December 31, 2020 | 11,169,964 | 10,945,199 | 224,765 | (a) | ||||||||||||||||||||||
March 31, 2021 | 11,913,568 | 11,274,970 | 638,598 | (b) | ||||||||||||||||||||||
June 30, 2021 | 12,436,034 | 12,403,163 | 32,871 | (c) | ||||||||||||||||||||||
September 30, 2021 | 14,221,047 | 13,099,170 | 1,121,877 | (d) |
| | | | | | | | | | | |
| | | | Weighted-Average | | | | | Explanations | ||
| | Quarter-End | | Balance During | | | | for Significant | |||
Quarter Ended |
| Balance |
| Quarter |
| Variance |
| Variances | |||
December 31, 2019 | | | 9,936,500 | | | 9,535,839 | | | 400,661 | | (a) |
March 31, 2020 | | | 10,714,680 | | | 10,194,276 | | | 520,404 | | (b) |
June 30, 2020 | | | 9,858,371 | | | 10,218,089 | | | (359,718) | | (c) |
September 30, 2020 | | | 10,638,537 | | | 10,151,695 | | | 486,842 | | (d) |
Borrowings under Unsecured Senior Notes
Refer to Note 10 of ourthe Condensed Consolidated Financial Statements for further disclosure regarding the terms of our unsecured senior notes.
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Scheduled Principal Repayments on Investments and Overhang on Financing Facilities
Scheduled Principal Repayments on Loans and HTM Securities | Scheduled/Projected Principal Repayments on RMBS and CMBS | Projected/Required Repayments of Financing | Scheduled Principal Inflows Net of Financing Outflows | |||||||||||||||||||||||
Fourth Quarter 2021 | $ | 710,058 | $ | 7,920 | $ | (593,437) | $ | 124,541 | ||||||||||||||||||
First Quarter 2022 | 421,401 | 6,677 | (268,503) | 159,575 | ||||||||||||||||||||||
Second Quarter 2022 | 242,599 | 10,628 | (345,472) | (92,245) | (1) | |||||||||||||||||||||
Third Quarter 2022 | 218,028 | 13,000 | (1,332,689) | (1,101,661) | (2) | |||||||||||||||||||||
Total | $ | 1,592,086 | $ | 38,225 | $ | (2,540,101) | $ | (909,790) |
Shortfall primarily relates to: (i) $290.9 million of repayments under a Residential Loans repurchase facility that we intend to extend with the lender's consent, the current balance of which will be repaid with securitization proceeds.
| | | | | | | | | | | | | |
|
| Scheduled Principal |
| Scheduled/Projected |
| Projected/Required |
| Scheduled Principal |
| ||||
| | Repayments on Loans | | Principal Repayments | | Repayments of | | Inflows Net of |
| ||||
| | and HTM Securities | | on RMBS and CMBS | | Financing | | Financing Outflows |
| ||||
Fourth Quarter 2020 |
| | 365,971 |
| | 11,541 |
| | (391,571) | (1) | | (14,059) | |
First Quarter 2021 |
| | 464,105 |
| | 7,981 |
| | (1,268,191) | (2) | | (796,105) | |
Second Quarter 2021 | | | 415,973 | | | 16,066 | | | (83,194) | | | 348,845 | |
Third Quarter 2021 | | | 146,337 | | | 6,803 | | | (151,131) | | | 2,009 | |
Total | | $ | 1,392,386 | | $ | 42,391 | | $ | (1,894,087) | | $ | (459,310) | |
In the normal course of business, the Company is in discussions with its lenders to extend, amend or amendreplace any financing facilities which contain near term expirations.
Other Potential Sources of Financing
Repurchases
In February 2020,leverage have not changed significantly since December 31, 2020. Refer to our board of directors authorized the repurchase of up to $400.0 millionForm 10-K for a description of our outstanding common shares and convertible senior notes over a periodstrategies regarding use of one year. Purchases made pursuant to the program will be made in either 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 $28.8 million of common stock and no convertible senior notes under the repurchase program. As of September 30, 2020, we have $371.2 million of remaining capacity to repurchase common stock and/or convertible senior notes under the repurchase program.
102
Off-Balance Sheet Arrangements
We have relationships with unconsolidated entities and financial partnerships, such as entities often referred to as VIEs. Our maximum risk of loss associated with our involvement in VIEs is limited to the carrying value of our investment in the entity and any unfunded capital commitments. Refer to Note 14 of the Condensed Consolidated Financial Statements for further discussion.
Dividends
U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We generally intend to distribute substantially all of our taxable income (which does not necessarily equal our GAAP net income) to our stockholders each year, if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating and debt service requirements. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. Refer to our Form 10-K for a detailed dividend history.
| | | | | | | | | |
Declare Date |
| Record Date |
| Payment Date |
| Amount |
| Frequency | |
9/16/20 | | 9/30/20 | | 10/15/20 | | $ | 0.48 | | Quarterly |
6/16/20 | | 6/30/20 | | 7/15/20 | | $ | 0.48 | | Quarterly |
2/25/20 | | 3/31/20 | | 4/15/20 | | $ | 0.48 | | Quarterly |
Leverage Policies
Our strategies with regards to use of leverage have not changed significantly since December 31, 2019. Refer to our Form 10-K for a description of our strategies regarding use of leverage.
103
Declare Date | Record Date | Payment Date | Amount | Frequency | ||||||||||||||||||||||||||||
9/15/2021 | 9/30/2021 | 10/15/2021 | $ | 0.48 | Quarterly | |||||||||||||||||||||||||||
6/14/2021 | 6/30/2021 | 7/15/2021 | 0.48 | Quarterly | ||||||||||||||||||||||||||||
3/11/2021 | 3/31/2021 | 4/15/2021 | 0.48 | Quarterly |
Contractual Obligations and Commitments
Contractual
Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | |||||||||||||||||||||||||
Secured financings (a) | $ | 11,587,206 | $ | 1,653,932 | $ | 1,525,361 | $ | 5,830,378 | $ | 2,577,535 | |||||||||||||||||||
CLOs and SASB (b) | 2,633,841 | 125,998 | 993,829 | 1,494,263 | 19,751 | ||||||||||||||||||||||||
Unsecured senior notes | 1,750,000 | 300,000 | 550,000 | 900,000 | — | ||||||||||||||||||||||||
Future loan commitments: | |||||||||||||||||||||||||||||
Commercial Lending (c) | 1,352,772 | 1,000,526 | 342,434 | 9,812 | — | ||||||||||||||||||||||||
Residential Lending (d) | 877,689 | 877,689 | — | — | — | ||||||||||||||||||||||||
Infrastructure Lending (e) | 150,432 | 144,484 | 5,948 | — | — |
| | | | | | | | | | | | | | | | |
|
| | |
| Less than |
| | |
| | |
| More than |
| ||
| | Total | | 1 year | | 1 to 3 years | | 3 to 5 years | | 5 years |
| |||||
Secured financings (a) | | $ | 9,702,162 | | $ | 1,122,893 | (b) | $ | 1,022,114 | | $ | 4,532,587 | | $ | 3,024,568 | |
Collateralized loan obligations | | | 936,375 | | | — | | | — | | | — | | | 936,375 | |
Unsecured senior notes | |
| 1,950,000 | |
| 500,000 | |
| 950,000 | |
| 500,000 | |
| — | |
Loan and preferred equity interest funding commitments (c) | |
| 1,630,823 | |
| 1,125,780 | |
| 485,886 | |
| 19,157 | |
| — | |
Infrastructure Lending Segment commitments (d) | | | 241,646 | | | 202,786 | | | 38,860 | | | — | | | — | |
Future lease commitments | |
| 31,324 | |
| 7,163 | |
| 4,741 | |
| 3,529 | |
| 15,891 | |
Total | | $ | 14,492,330 | | $ | 2,958,622 | | $ | 2,501,601 | | $ | 5,055,273 | | $ | 3,976,834 | |
Excludes $234.1 million of loan funding commitments in which management projects the Company will not be obligated to fund in the future due to repayments made by the borrower earlier than, or in excess of, expectations.
Represents outstanding residential loan purchase commitments.
policies included in Note 2 to the Condensed Consolidated Financial Statements.
As discussed in Note 2 to the Condensed Consolidated Financial Statements, ASC 326, Financial Instruments – Credit Losses, became effective for the Company on January 1, 2020. ASC 326 mandates the use of a current expected credit loss model (“CECL”) for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under GAAP. The CECL model requires the
104
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.
105
| | | | | | | | |
|
| Face Value of |
| Aggregate Notional Value of |
| Number of | ||
| | Loans Held-for-Sale | | Credit Index Instruments | | Credit Index Instruments | ||
September 30, 2020 | | $ | 266,370 | | $ | 69,000 |
| 4 |
December 31, 2019 | | $ | 160,635 | | $ | 89,000 |
| 5 |
The COVID-19 pandemic has significantly impacted the commercial real estate markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in construction and development and infrastructure projects currently planned or underway. These negative conditions have continued, and may continue into the future and impair our borrowers’ ability to pay principal and interest due to us under our loan agreements and our tenants’ ability to pay rent under various lease arrangements.
As discussed above, our asset management team reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. We have utilized these relationships to address the potential impacts of the COVID-19 pandemic to the assets which secure our loans, particularly hospitality assets. Some of our borrowers have indicated that due to the impact of the COVID-19 pandemic, they will be unable to timely execute their business plans, have had to temporarily close their businesses, or have experienced other negative business consequences which have led to cash flow pressures at the underlying properties. In some cases, these borrowers have requested temporary interest deferral or forbearance, or other modifications of their loans.
Discussions we have had with our borrowers and tenants have addressed potential near-term defensive loan or lease modifications, which could include repurposing of reserves, temporary deferrals of interest, or performance test or covenant waivers on loans collateralized by assets directly impacted by the COVID-19 pandemic.
As discussed above, we have granted loan modifications to certain of our borrowers. Although we continue to believe that the principal amounts of our assets are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.
Capital Market Risk
We are exposed to risks related to the equity capital markets and our related ability to raise capital through the issuance of our common stock or other equity instruments. We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under repurchase obligations or other debt
106
Face Value of Loans Held-for-Sale | Aggregate Notional Value of Credit Index Instruments | Number of Credit Index Instruments | ||||||||||||||||||
September 30, 2021 | $ | 39,300 | $ | 49,000 | 3 | |||||||||||||||
December 31, 2020 | $ | 90,789 | $ | 69,000 | 4 |
instruments. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing and terms of capital we raise.
The COVID-19 pandemic has also resulted in extreme volatility in a variety of global markets, including the real estate-related debt markets. We may receive margin calls from our lenders as a result of the decline in the market value of the loans or other assets pledged by us to our lenders under our repurchase agreements and warehouse credit facilities, and if we fail to resolve such margin calls when due by payment of cash or delivery of additional collateral, the lenders may exercise remedies including demanding payment by us of our aggregate outstanding financing obligations and/or taking ownership of the loans or other assets securing the applicable obligations.
Interest Rate Risk
| | | | | | | | | |
|
| |
| Aggregate Notional |
| |
| ||
| | Face Value of | | Value of Interest | | Number of Interest |
| ||
| | Hedged Instruments | | Rate Derivatives | | Rate Derivatives |
| ||
Instrument hedged as of September 30, 2020 | | | | | | | | | |
Loans held-for-sale | | | 1,008,476 | | | 566,400 |
| 47 | |
RMBS, available-for-sale | |
| 260,260 | |
| 421,000 |
| 4 | |
CMBS, fair value option | | | 130,934 | | | 71,000 | | 2 | |
HTM debt securities | | | 17,082 | | | 17,082 | | 1 | |
Secured financing agreements | |
| 925,317 | | | 1,631,573 |
| 24 | |
Unsecured senior notes | |
| 1,000,000 | | | 970,000 |
| 2 | |
| | $ | 3,342,069 | | $ | 3,677,055 |
| 80 | |
Instrument hedged as of December 31, 2019 | | | | | | | | | |
Loans held-for-investment, residential | | $ | 654,925 | | $ | 169,200 |
| 8 | |
Loans held-for-sale | | | 747,779 | | | 344,900 |
| 24 | |
RMBS, available-for-sale | |
| 278,853 | |
| 85,000 |
| 2 | |
HTM debt securities | | | 18,784 | | | 18,784 | | 1 | |
Secured financing agreements | |
| 693,496 | | | 1,423,881 |
| 14 | |
Unsecured senior notes | |
| 1,000,000 | | | 970,000 |
| 2 | |
| | $ | 3,393,837 | | $ | 3,011,765 |
| 51 | |
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Face Value of Hedged Instruments | Aggregate Notional Value of Credit Index Instruments | Number of Credit Index Instruments | |||||||||||||||
Instrument hedged as of September 30, 2021 | |||||||||||||||||
Loans held-for-sale | $ | 1,797,642 | $ | 1,660,200 | 38 | ||||||||||||
RMBS, available-for-sale | 229,843 | 85,000 | 2 | ||||||||||||||
CMBS, fair value option | 126,864 | 71,000 | 2 | ||||||||||||||
HTM debt securities | 14,937 | 14,937 | 1 | ||||||||||||||
Secured financing agreements | 995,657 | 1,663,233 | 23 | ||||||||||||||
Unsecured senior notes | 500,000 | 470,000 | 1 | ||||||||||||||
$ | 3,664,943 | $ | 3,964,370 | 67 | |||||||||||||
Instrument hedged as of December 31, 2020 | |||||||||||||||||
Loans held-for-sale | $ | 911,596 | $ | 557,000 | 25 | ||||||||||||
RMBS, available-for-sale | 252,738 | 421,000 | 4 | ||||||||||||||
CMBS, fair value option | 125,985 | 71,000 | 2 | ||||||||||||||
HTM debt securities | 16,554 | 16,554 | 1 | ||||||||||||||
Secured financing agreements | 1,008,909 | 1,633,357 | 24 | ||||||||||||||
Unsecured senior notes | 500,000 | 470,000 | 1 | ||||||||||||||
$ | 2,815,782 | $ | 3,168,911 | 57 |
The following table summarizes the estimated annual change in net investment income for our variable rate investments and our variable rate debt assuming increases or decreases in LIBOR or other applicable index rates and adjusted for the effects of our interest rate hedging activities (amounts in thousands, except per share data):
Income (Expense) Subject to Interest Rate Sensitivity | Variable rate investments and indebtedness (1) | 1.0% Increase | 0.5% Increase | 0.5% Decrease | 1.0% Decrease | |||||||||||||||||||||||||||
Investment income from variable rate investments | $ | 13,244,542 | $ | 75,698 | $ | 32,159 | $ | (3,482) | $ | (3,609) | ||||||||||||||||||||||
Interest expense from variable rate debt, net of interest rate derivatives | (9,646,375) | (97,853) | (46,840) | 1,991 | (3,599) | |||||||||||||||||||||||||||
Net investment income from variable rate instruments | $ | 3,598,167 | $ | (22,155) | $ | (14,681) | $ | (1,491) | $ | (7,208) |
| | | | | | | | | | | | | | | |
|
| Variable rate |
| | |
| | |
| | |
| | | |
| | investments and | | 1.0% | | 0.5% | | 0.5% | | 1.0% | |||||
Income (Expense) Subject to Interest Rate Sensitivity | | indebtedness (1) | | Increase | | Increase | | Decrease | | Decrease | |||||
Investment income from variable rate investments | | $ | 10,562,374 | | $ | 40,504 | | $ | 16,251 | | $ | (4,176) | | $ | (4,303) |
Interest expense from variable rate debt, net of interest rate derivatives | |
| (7,266,674) | |
| (78,864) | |
| (38,941) | |
| 11,425 | |
| 12,724 |
Net investment income from variable rate instruments | | $ | 3,295,700 | | $ | (38,360) | | $ | (22,690) | | $ | 7,249 | | $ | 8,421 |
Impact per diluted shares outstanding | | | | | $ | (0.13) | | $ | (0.08) | | $ | 0.03 | | $ | 0.03 |
LIBOR Transition Risk
In July 2017, the United Kingdom’s Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. There is currently no certainty regarding the future utilization of LIBOR or of any particular replacement rate (although the secured overnight financing rate has been proposed as an alternative to U.S.-dollar LIBOR). As indicated in the Interest Rate Risk section above, a substantial portion of our loans, investment securities, borrowings and interest rate derivatives are indexed to LIBOR or similar reference rates. Market participants anticipate that financial instruments tied to LIBOR will require transition to an alternative reference rate if LIBOR is no longer available. Our LIBOR-based loan agreements and borrowing arrangements generally specify alternative reference rates such as the prime rate and federal funds rate, respectively. The potential effect of the discontinuation of LIBOR on our interest income and expense cannot yet be determined and any changes to benchmark interest rates could increase our financing costs and/or result in mismatches between the interest rates of our investments and the corresponding financings.
Foreign Currency Risk
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The following table represents our current currency hedge exposure as it relates to our investments denominated in foreign currencies, along with the aggregate notional amount of the hedges in place (amounts in thousands except for number of contracts) using the September 30, 20202021 GBP closing rate of 1.2916,1.3472, EUR closing rate of 1.17221.15848 and AUD closing rate of 0.7161.
| | | | | | | | | | |
Carrying Value of Net Investment | | Local Currency | | Number of | | Aggregate Notional Value of Hedges Applied | | Expiration Range of Contracts | ||
$ | 78,924 | | AUD | | 12 | | $ | 86,564 | | November 2021 |
| 18,356 | | GBP | | 9 | | | 27,287 | | October 2020 – December 2023 |
| 24,346 | | EUR | | 124 | | | 22,581 | | October 2020 – October 2021 |
| 29,805 | | GBP | | 1 | | | 36,727 | | July 2023 |
| 79,284 | | GBP | | 22 | | | 83,212 | | October 2020 – January 2022 |
| 59,075 | | EUR | | 39 | | | 64,005 | | November 2020 – March 2023 |
| 28,275 | | EUR | | 48 | | | 31,555 | | November 2020 – August 2022 |
| 109,658 | | GBP | | 20 | | | 119,540 | | October 2020 – January 2024 |
| 73,481 | | GBP | | 16 | | | 60,557 | | April 2021 |
| 5,794 | | EUR | | 8 | | | 7,191 | | November 2020 – July 2022 |
| 11,692 | | GBP | | 8 | | | 14,479 | | November 2020 – July 2022 |
| 76 | | AUD | | 1 | | | 4,055 | | August 2021 |
| 24,478 | | EUR | | 24 | | | 31,434 | | November 2020 – June 2023 |
| 39,553 | | EUR | | 11 | | | 60,752 | | November 2020 – November 2022 |
| 40,834 | | EUR | | 21 | | | 50,374 | | December 2020 – November 2025 |
| 11,074 | | EUR | | 7 | | | 14,954 | | November 2020-November 2023 |
| 46,268 | | GBP | | 17 | | | 61,098 | | November 2020-May 2024 |
| 57,681 | | GBP | | 20 | | | 67,135 | | November 2020 – November 2021 |
| 11,217 | | EUR | | 8 | | | 13,068 | | June 2022 |
| 10,058 | | GBP | | 7 | | | 12,956 | | December 2020 – April 2022 |
$ | 759,929 | | | | 423 | | $ | 869,524 | | |
Real Estate Risk
The market values of commercial and residential mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, the impacts of the COVID-19 pandemic discussed above, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.
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Carrying Value of Net Investment | Local Currency | Number of Foreign Exchange Contracts | Aggregate Notional Value of Hedges Applied | Expiration Range of Contracts | ||||||||||||||||||||||
$ | 19,401 | GBP | 5 | $ | 25,942 | October 2021 - December 2023 | ||||||||||||||||||||
36,733 | GBP | 4 | 41,571 | July 2022 - July 2023 | ||||||||||||||||||||||
14,508 | GBP | 14 | 23,329 | October 2021 - February 2025 | ||||||||||||||||||||||
25,055 | EUR | 13 | 24,967 | October 2021 - October 2022 | ||||||||||||||||||||||
20,519 | EUR | 9 | 30,892 | November 2021 - November 2023 | ||||||||||||||||||||||
102,888 | GBP | 21 | 103,711 | October 2021 - August 2022 | ||||||||||||||||||||||
52,422 | GBP | 15 | 62,804 | November 2021 - May 2024 | ||||||||||||||||||||||
28,248 | GBP | 10 | 36,496 | October 2021 - January 2024 | ||||||||||||||||||||||
3,124 | GBP | 1 | 3,583 | October 2021 | ||||||||||||||||||||||
28,222 | EUR | 24 | 27,389 | November 2021 - August 2022 | ||||||||||||||||||||||
18,115 | GBP | 11 | 24,431 | November 2021 - May 2024 | ||||||||||||||||||||||
115,376 | GBP | 35 | 153,977 | October 2021 - January 2024 | ||||||||||||||||||||||
5,232 | EUR | 4 | 6,480 | November 2021 - July 2022 | ||||||||||||||||||||||
353 | GBP | 12 | 26,933 | November 2021 - July 2022 | ||||||||||||||||||||||
117,048 | GBP | 9 | 155,375 | November 2021 - November 2023 | ||||||||||||||||||||||
5,914 | AUD | 2 | 4,092 | August 2022 - August 2023 | ||||||||||||||||||||||
17,731 | EUR | 16 | 20,266 | November 2021 - June 2023 | ||||||||||||||||||||||
32,333 | EUR | 13 | 61,782 | November 2021 - November 2022 | ||||||||||||||||||||||
36,386 | EUR | 18 | 43,321 | December 2021 - November 2025 | ||||||||||||||||||||||
11,825 | EUR | 3 | 14,346 | November 2021 - November 2023 | ||||||||||||||||||||||
61,311 | GBP | 4 | 63,016 | November 2021 | ||||||||||||||||||||||
27,381 | AUD | 26 | 33,856 | October 2021 - October 2024 | ||||||||||||||||||||||
148,635 | AUD | 23 | 149,786 | November 2021 - June 2022 | ||||||||||||||||||||||
24,091 | EUR | 16 | 24,108 | June 2022 - April 2023 | ||||||||||||||||||||||
12,067 | GBP | 3 | 12,714 | December 2021 - April 2022 | ||||||||||||||||||||||
— | EUR | 32 | 102,704 | October 2021 - March 2023 | ||||||||||||||||||||||
$ | 964,918 | 343 | $ | 1,277,871 |
Changes in Internal Control Over Financial Reporting. No change in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended September 30, 20202021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Except as set forth below, thereFactors.
Risks Related to Our Company
The global COVID-19 pandemic is having, and will likely continue to have, an adverse impact on our operations and financial performance, as well as on the operations and financial performance of many of the borrowers underlying our real estate-related assets and tenants of our owned properties. We are unable to predict the extent to which the pandemic and related impacts will continue to adversely impact our business, financial condition, results of operations, liquidity, the market price of our common stock and our ability to make distributions to our stockholders.
Our operations and financial performance have been negatively impacted by the COVID-19 pandemic that has caused, and is expected to continue to cause, the global slowdown of economic activity and significant volatility and disruption of financial markets. Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing and difficult to predict, the pandemic’s impact on our business, financial condition, results of operations, liquidity, the market price of our common stock and our ability to make distributions to our stockholders, remains uncertain and difficult to predict. Further, the ultimate impact of the COVID-19 pandemic on our business, financial condition, results of operations, liquidity, the market price of our common stock and our ability to make distributions to our stockholders depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including quarantine and “stay-at-home” orders, restrictions on travel and transport, school closures, limits on the operations of non-essential businesses and other workforce pressures); the impact of the pandemic, and actions taken in response thereto, on global and regional economies and economic activity, including concerns regarding additional surges of the pandemic or the expansion of the economic impact thereof as a result of certain jurisdictions “re-opening” or otherwise lifting certain restrictions prematurely; the availability of U.S. federal, state, local or non-U.S. funding programs aimed at supporting the economy during the COVID 19-pandemic, including uncertainties regarding the potential implementation of new or extended programs; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides.
The COVID-19 pandemic and “stay-at-home” and other measures implemented to prevent its spread and any extended period of economic slowdown or recession could have a material adverse effect on our business, financial condition, results of operations, liquidity, the market price of our common stock and our ability to make distributions to our stockholders, among other matters. We expect that these adverse effects are likely to continue as long as the outbreak persists and potentially even longer. Although it is difficult to predict the magnitude of the business and economic implications, the COVID-19 outbreak could affect us in various ways, including, among other factors:
111
We have been engaged in discussions with our borrowers, some of whom have indicated that, due to the impact of the COVID-19 pandemic, they have been unable to timely execute their business plans, have had to temporarily close their businesses or have experienced other negative business consequences and have requested or indicated that they will be requesting interest or principal deferral or other modifications of their loans. We therefore anticipate more frequent modifications of our loans and potentially instances of default or foreclosure on assets underlying our loans.
To the extent that borrowers that have been negatively impacted by the COVID-19 pandemic do not timely remit payments of principal and interest relating to their respective real estate-related assets, the value of such assets will likely be impaired, potentially materially. Failure to receive interest when due may adversely affect our liquidity and therefore our ability to fund our operations or address maturing liabilities on a timely basis.
112
The adverse impact of the COVID-19 pandemic could adversely affect our liquidity position and could limit our ability to grow our business and fully execute our business strategy. We expect to preserve and build our liquidity to best position the Company to weather near-term market uncertainty, satisfy our loan future funding and financing obligations and to potentially make opportunistic new investments, which will cause us to take some or all of the following actions: raise capital from offerings of securities, borrow additional capital, sell assets, pay our management and incentive fees in shares of our common stock (as was done for the quarter ended March 31, 2020) and/or change our dividend practice, including by reducing the amount of, or temporarily suspending, our future dividends or paying our future dividends in kind for some period of time.
To the extent the COVID-19 pandemic adversely affects our business, financial condition, results of operations, liquidity, the market price of our common stock and our ability to make distributions to our stockholders, it may also have the effect of heightening many of the other risks described in the Form 10-K under the heading “Risk Factors.”
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2021.
Securities.
Disclosures.
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INDEX TO EXHIBITS
Exhibit No. | Description | ||||||||
4.1 | |||||||||
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| Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | ||||||||
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31.2 |
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32.1 |
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32.2 |
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101.INS |
| XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document | |||||||
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
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104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
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| STARWOOD PROPERTY TRUST, INC. | |||||||
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Date: November | By: | /s/ BARRY S. STERNLICHT | ||||||
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| Barry S. Sternlicht Chief Executive Officer Principal Executive Officer | ||||||
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Date: November | By: | /s/ RINA PANIRY | ||||||
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| Rina Paniry Chief Financial Officer, Treasurer, Chief Accounting Officer and Principal Financial Officer |
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