Starwood Property Trust — Q3 2026 Earnings Summary

Financial Performance

• Reported a third-quarter GAAP net loss of $389.7 million, inclusive of a $336.6 million credit loss provision and $32.2 million in non-cash property impairments.
• Distributable Earnings (DE) were $116.8 million, or $0.31 per diluted share.
• Distributable Earnings prior to realized commercial lending gains and losses were $155.2 million, or $0.41 per diluted share.
• For the nine months ended September 30, 2026, Distributable Earnings totaled $415.5 million ($1.09 per share), while DE prior to realized commercial lending gains and losses was $458.7 million ($1.21 per share).
• Total revenues for the quarter were $545.9 million, with interest income from loans at $409.3 million and rental income at $90.5 million.
• Total costs and expenses for the quarter were $839.7 million, driven by interest expense of $359.1 million and a credit loss provision of $336.6 million.
• The company deployed $3.2 billion in investments during the quarter and $8.2 billion year-to-date.
• Commercial lending investments reached $2.4 billion in the quarter, the highest level in four years, bringing the total commercial lending portfolio to a record $17.8 billion.
• Cash and cash equivalents totaled $391.9 million as of September 30, 2026, with restricted cash at $320.8 million.
• Total assets were $57.96 billion, with loans held-for-investment net at $19.97 billion and VIE assets at fair value at $27.70 billion.
• Total liabilities were $51.43 billion, including secured financing agreements net of $15.35 billion and securitized financing net of $4.50 billion.
• Stockholders' equity was $5.84 billion, with an accumulated deficit of $902.9 million.

Guidance and Future Outlook

• Management expects to resolve almost half of the underperforming assets held at the start of the year.
• The company anticipates continued deployment of capital across diversified businesses focusing on attractive risk-adjusted returns.
• Management noted that while borrowers are feeling the pain of higher interest costs, the balance sheet and liquidity remain very strong.

Business Segments and Product Lines

• Commercial and Residential Lending Segment: Generated $377.5 million in revenue for the quarter, with interest income from loans at $341.1 million.
• Infrastructure Lending Segment: Reported $70.5 million in revenue, with interest income from loans at $66.7 million.
• Property Segment: Generated $68.5 million in revenue, including $68.3 million in rental income.
• Investing and Servicing Segment: Reported $66.4 million in revenue, primarily from servicing fees ($36.9 million) and interest income from investment securities ($22.2 million).
• The company completed approximately $2.1 billion of financing transactions earlier in the year at rates and spreads below current market levels.

Market and Competitive Landscape

• Interest rates skyrocketed in the third quarter, causing the forward yield curve to move sharply higher.
• Real estate markets continued to heal, bolstered by a meaningful collapse in most major asset classes.
• The rise in rates sent a shock wave through the property sector and related rate-sensitive sectors.
• Fitch Reaffirmed their highest rating for LNR's Commercial Special Servicer (CSS1).

Risks and Challenges

• The company faces risks related to the completion of pending investments and financings.
• Continued ability to acquire additional investments and competition within the finance and real estate industries are cited as potential risks.
• Availability of financing and other risks detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, remain relevant.
• The company recorded a significant $336.6 million credit loss provision for the quarter.

Management Commentary and Tone

• Barry Sternlicht, Chairman and CEO, described the third quarter as "somewhat historic" due to the sharp rise in interest rates and market conditions.
• Sternlicht stated the company "held steady" and continued to make meaningful investments while resolving underperforming assets.
• Jeffrey DiModica, President, highlighted the proactive refinancing of corporate debt prior to the significant rate rise and the company's vigilance in capital deployment.
• Management emphasized a focus on the most attractive risk-adjusted returns and the strength of the balance sheet despite borrower challenges.

Other Key Points

• The company repurchased $108 million of common shares in the quarter.
• A dividend of $0.48 per share was declared.
• The company has successfully deployed $123 billion of capital since inception and manages a portfolio of $32 billion across debt and equity investments as of September 30, 2026.
• Supplemental earnings schedules and reconciliation tables for Distributable Earnings are available on the company's Investor Relations website.
• A live webcast and conference call were hosted on November 6, 2026, to discuss results.