Our Company

At a Glance

Starwood Property Trust (NYSE: STWD) is a leading, diversified real estate finance company with:

• Shares publicly traded on the New York Stock Exchange (STWD) and a current market capitalization of approximately $6 billion.
• Total capital deployed since inception of over $97 billion.
• A portfolio of over $26 billion across the company’s Commercial and Residential Lending, Infrastructure Lending, Investing & Servicing and Property business segments.
• Approximately 350 dedicated employees.
• The ability to leverage the platform of Starwood Capital Group, a leading global private investment firm with 32 years of experience and broad operating expertise across virtually every real estate asset class.
• The size and expertise to successfully execute large, complex real estate transactions.
• One of the largest commercial mortgage special servicing business in the United States.
• A strategy of mitigating risk by maintaining a diversified portfolio of investments.
• A focus on providing a secure dividend for investors.

Company

Starwood Property Trust, an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States.

Amid the depths of the Great Recession, Starwood Capital recognized that traditional commercial lenders were withdrawing from the marketplace and a significant need had emerged for alternative commercial mortgage financings. In response, the Firm established Starwood Property Trust and in August 2009 took the company public (NYSE: STWD)—creating the largest blind pool company ever traded on the New York Stock Exchange. The business has since grown dramatically, and Starwood Property Trust today is the largest commercial mortgage REIT in the United States, with a market capitalization of approximately $6 billion and approximately 350 dedicated employees.

While other commercial real estate finance companies remain focused solely on specific sectors of the market, Starwood Property Trust’s multi-cylinder investment platform allows it to dynamically seek out investment opportunities across a much broader universe. Starwood Property Trust’s management team collaborates with Starwood Capital Group and its approximately 4,000 employees across 16 offices worldwide on a top-down and bottom-up approach to finding the best risk/reward opportunities. By leveraging the scale and global relationships of Starwood Capital Group and its affiliates, Starwood Property Trust is able to identify potential transactions that the company believes cannot be sourced by many of today’s market participants.

The company’s core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt investments. In conjunction with Starwood Capital, Starwood Property Trust in April 2013 acquired LNR Property LLC and subsidiary LNR Partners LLC, the largest special servicer in the U.S., thus gaining significant expertise in the distressed marketplace while also adding substantial scale and sophistication to the company’s operations. In addition, Starwood Property Trust in early 2014 spun off its single-family residential operations into a new entity, Starwood Waypoint Residential Trust (NYSE: SWAY), formerly trading as Starwood Waypoint Homes (NYSE: SFR; merger with Invitation Homes (NYSE: INVH) announced in August 2017) that is listed alongside Starwood Property Trust on the New York Stock Exchange—and the combined company is one of the largest publicly traded investors, owners and operators of single-family rental homes in the United States.

Starwood Property Trust further expanded its platform in 2014 when it began investing in owned real estate assets to complement its other businesses having built a portfolio of approximately $2.6 billion today. At the end of 2016, Starwood Property Trust launched its Residential Lending platform, commencing its strategy of investing in non-agency residential mortgage loans. Most recently, Starwood has entered the Infrastructure Lending sector through its acquisition of GE’s Energy Project Finance debt business in 2018.

With total capital deployed since inception of over $97 billion, Starwood Property Trust continues to solidify its position as one of the world’s leading diversified real estate finance companies.

History

Business Segments

Starwood Property Trust has been organized into complementary business segments that allow the firm to efficiently deploy capital throughout the real estate cycle.

REAL ESTATE LENDING

Starwood Property Trust’s primary business since the company’s IPO in 2009, the real estate lending segment has deployed over $54.8 billion of capital since inception. The company has built a leading franchise in the global real estate finance market by offering seamless, customized solutions for borrowers—including first mortgages, subordinate debt, mezzanine loans, B-notes and preferred equity. The company possesses the size and scale to serve as a one-stop lender, and the team leverages Starwood Capital Group’s expertise across virtually every real estate asset class to help source, structure and underwrite transactions.

In 2016, Starwood Property Trust commenced its strategy of investing in non-agency residential mortgage loans. This new business leverages Starwood’s existing expertise in the Residential sector and the same team of professionals that helped create Starwood Waypoint in 2013. To date, the company has invested approximately $13.5 billion in primarily non-agency residential loans.

REAL ESTATE INVESTING AND SERVICING

This segment includes a variety of business lines focused on commercial mortgage-backed securities (CMBS) and commercial real estate investments, special servicing operations and a commercial mortgage conduit platform. The company’s leadership in CMBS and special servicing is the result of its disciplined and consistent approach to investing. Combined with extensive credit underwriting, acquisition, management and workout expertise, this approach has resulted in strong performance for this segment’s investments across multiple real estate cycles.

• CMBS and Commercial Real Estate Investments Starwood Property Trust is a leader in investing in both CMBS and related commercial real estate assets, with a diversified portfolio of approximately $638 million. The company’s due diligence process supports an unsurpassed execution capacity—including the ability to underwrite hundreds of loans within a short timeframe, utilizing personnel across the United States and deep relationships in the commercial real estate brokerage community. Investment decisions are informed by a proprietary database management system that tracks over 100,000 properties around the country.
• Special Servicing The company operates one of the largest commercial mortgage special servicer in the United States, LNR Partners LLC. LNR is the named special servicer on approximately 23% of all transactions in the CMBS conduit universe. Since inception, LNR has resolved over 7,270 non-performing assets with a total principal balance of over $89 billion across all major property types. Despite the increasing complexity of workouts, LNR has achieved a resolution rate of approximately 73% in loan and real estate owned (REO) property liquidations.
• Conduit Starwood Property Trust’s commercial real estate conduit loan origination platform, Starwood Mortgage Capital, originates five-, seven- and 10-year fixed-rate mortgages throughout the United States, secured by all major real estate asset classes. With transactions typically ranging from $5–100 million, and an average turnover rate of 30–40 days, Starwood Mortgage Capital has originated and securitized over $16.4 billion in loans since its inception in 2012.

PROPERTY

In 2014, Starwood Property Trust began investing in real estate assets to complement its other businesses. These equity investments, totaling approximately $2.6 billion, comprise high-quality, stable real estate assets with a value-added element—thus allowing the company the opportunity to generate attractive risk-adjusted returns. The company focuses on investing in properties that generate current, stable cash-on-cash returns while also offering the potential for capital appreciation.

INFRASTRUCTURE LENDING

In 2018, Starwood Property Trust acquired an Energy Project Finance Debt platform and $2.5 billion loan portfolio from GE Financial Services. The vertically integrated platform included a seasoned leadership team and employees across loan origination, underwriting, capital markets and asset management. This represents a new lending vertical for Starwood Property Trust in the growing infrastructure finance sector.

Edge

Starwood Property Trust occupies a unique position in the global real estate finance market, based on the following differentiators.

DEEP, HANDS-ON REAL ESTATE PERSPECTIVE

Starwood Property Trust has successfully navigated multiple real estate cycles, with a track record of deploying over $97 billion of capital since inception. In addition, the company’s affiliation with Starwood Capital Group allows Starwood Property Trust to leverage the Firm’s 32 years of experience as a real estate investor and broad operating expertise. As a result, the company possesses a granular understanding of real estate credit risk, and can evaluate each transaction from both a lender’s and equity investor’s perspective.

ONE-STOP SHOP FOR COMPLEX TRANSACTIONS

With access to multiple sources of financing and an experienced team of loan origination and syndication professionals, Starwood Property Trust can offer customized and creative solutions to borrowers—in keeping with its goal of being included on virtually every major commercial real estate investor’s short list of preferred lenders. Underscoring Starwood Property Trust’s scale, the average size of its loans since inception is nearly $100 million, and the company has the ability to structure and originate loans as large as $500 million.

GLOBAL REACH

Starwood Property Trust benefits from an unsurpassed global sourcing engine that comes from Starwood Capital Group’s position as one of the largest institutional real estate investors in the world, with nearly 4,000 employees across 16 offices on three continents. As a result, the company is able to cast a wide net in the search for investment opportunities, and can selectively pursue only those that offer particularly attractive potential risk/reward profiles.

IN-DEPTH MARKET KNOWLEDGE

With Starwood Property Trust’s 2013 acquisition of LNR came LNR Partners, one of the largest special servicer in the United States. This greatly expanded the company’s expertise in the distressed CRE marketplace. The Starwood Property Trust team can analyze both the commercial mortgage-backed securities markets and LNR’s special servicing portfolio to identify situations where it can provide potential solutions for troubled borrowers.

Information Advantage

The expertise developed through Starwood Capital Group’s symbiotic business lines enhances Starwood Property Trust’s judgment throughout the underwriting process. Starwood Capital Group’s affiliates and specialized teams—which provide Starwood Property Trust with critical, bottom-up intelligence in formulating its investment strategy—encompass the following sectors and asset classes:

• Residential (290,000 units)
• Hotels (409,000 keys)
• Office/Life Science (103 million square feet)
• Industrial/Data Center (79 million square feet)
• Retail (56 million square feet)
• Oil & Gas ($380 million AUM)

In addition, Starwood Property Trust’s special servicer tracks terabytes of proprietary historical commercial real estate data from over 100,000 performing and non-performing loans in its database—which helps inform decisions across the organization.

Approach

Starwood Property Trust employs its expertise and highly diversified and scalable investment platform across all facets of real estate finance to seek to generate consistent, risk-adjusted returns for shareholders. In its pursuit of this strategy, the company adheres to the following principles.

LOOK AT REAL ESTATE LENDING THROUGH AN EQUITY LENS

Starwood Property Trust has developed a culture of viewing real estate lending from a long-term balance-sheet perspective. The company internally underwrites and asset manages every transaction in its portfolio—which is expensive and time-consuming, but the team believes that this approach explains the portfolio’s strong credit performance. The Starwood Property Trust team also believes that it benefits from Starwood Capital Group’s years of real estate investment experience when sourcing and evaluating potential transactions.

PROVIDE A ONE-STOP FINANCING SOLUTION FOR BORROWERS

Starwood Property Trust prides itself on the ability to disintermediate traditional senior mortgage and mezzanine lenders by providing one-stop, combined financing in a single seamless process for borrowers. The team believes that its focus on large, customized financing solutions has helped set Starwood Property Trust apart from its competitors.

INVEST ACROSS THE REAL ESTATE CAPITAL STRUCTURE

Starwood Property Trust’s broad wholesale asset origination, acquisition and servicing model provides the company with the flexibility and expertise to invest across the real estate capital structure to take advantage of changing dynamics at different points in the real estate cycle.

FOCUS ON RISK MITIGATION

Starwood Property Trust is highly focused on mitigating risk in its portfolio. The company’s strategy is built on using modest financial leverage in seeking to achieve its target returns, and its floating rate business model provides protection from higher interest rates. In addition, Starwood Property Trust’s position as a leading commercial special servicer provides the company with a unique credit hedge against its CMBS and loan investments.