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1. Company Snapshot

1.a. Company Description

Starwood Property Trust, Inc.operates as a real estate investment trust (REIT) in the United States, Europe, and Australia.It operates through four segments: Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments.


The Commercial and Residential Lending segment originates, acquires, finances, and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, including distressed or non-performing loans.The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments.The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment.


The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts.The company qualifies as a REIT for federal income tax purposes and would not be subject to federal corporate income taxes, if it distributes at least 90% of its taxable income to its stockholders.Starwood Property Trust, Inc.


was incorporated in 2009 and is headquartered in Greenwich, Connecticut.

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1.b. Last Insights on STWD

Starwood Property Trust's recent performance was driven by its diversified business model, consistent dividends, and robust liquidity. The company's ability to increase loan originations in a lower rate environment and drive earnings higher is a significant positive. Its strategic shift into net lease assets, with long-term, stable cash flows, is also a key driver. Additionally, the company's experienced management and retained Fundamental team mitigate concerns around venturing outside core competencies.

1.c. Company Highlights

2. Starwood Property Trust's Q3 2025 Earnings: A Strong Performance Amidst Capital Deployment

Starwood Property Trust reported distributable earnings (DE) of $0.40 per share for the third quarter of 2025, slightly missing analyst estimates of $0.45. The company's GAAP net income was $0.19 per share. The financial performance was impacted by higher-than-normal cash drag due to $2.3 billion of capital raises, which is expected to normalize once the cash is deployed. The company's total assets reached a record $29.9 billion at quarter end.

Publication Date: Nov -13

📋 Highlights
  • Distributable Earnings (DE):: Reported $149 million ($0.40/share) for Q3 2025, with GAAP net income at $0.19/share, despite $2.3 billion in cash drag from capital raises.
  • New Investments:: Committed $4.6 billion across net lease ($2.2B), Commercial Lending ($1.4B), and Infrastructure Lending ($791M), with total assets hitting a record $29.9 billion.
  • Liquidity & Balance Sheet:: Maintained $2.2 billion liquidity and a "fortress" balance sheet with lower financing spreads, $642 million reserves, and $469 million CECL in Commercial Lending.
  • Affordable Housing Gains:: $1.5 billion gain in Florida affordable portfolio, with 6.7–10% projected rent increases in 2026 and $300 million cash-out refinancing to strengthen the balance sheet.
  • Data Center Financing Strategy:: Focused on credit quality with fully amortized loans, leveraging tight spreads and strong bank financing to drive ROE, despite counterparty risks in the sector.

Investment Activity and Portfolio Performance

The company committed $4.6 billion of new investments across its businesses, including $2.2 billion in net lease, $1.4 billion in Commercial Lending, and a record $791 million in Infrastructure Lending. In Commercial Lending, the company originated $1.4 billion of loans, of which nearly all was funded, and the portfolio grew $271 million to $15.8 billion. The credit quality remains strong, with $642 million of reserves and $469 million in CECL.

Net Lease Platform and Liquidity

The newly acquired net lease platform contributed $10 million of DE in the partial quarter from acquisition to quarter end. The company's liquidity stood at $2.2 billion, leaving its balance sheet well-positioned to support continued investment across its debt and equity businesses. The company's intent is to continue to grow and thrive as markets evolve with a balance sheet built to withstand volatility and capitalize on opportunity.

Valuation and Outlook

With a P/E Ratio of 16.59 and a Dividend Yield of 10.72%, the company's valuation appears reasonable. The ROE of 5.57% is relatively modest, but the ROIC of 54.9% is strong. Analysts estimate next year's revenue growth at 3.5%. Given the company's diversified franchise, strong liquidity, and ability to invest through cycles, it is well-positioned for future growth. As Barry Sternlicht, Chairman and CEO, stated, "the quarter was transitional, but the underlying businesses are strong, and the team is proven."

Market Trends and Opportunities

The company is seeing a city-by-city rent increase in the multifamily market, with a 60-65% reduction in supply in some markets. The depth of the purchase market is strong, with cap rates ranging from 4.3% to 5.5%. The company is also participating in data center financing, with a focus on credit quality, and has a growing pipeline in this space. With its strong balance sheet and diversified franchise, Starwood Property Trust is poised to capitalize on opportunities in the evolving real estate market.

3. NewsRoom

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Starwood Property: Not Out Of The Woods Just Yet

Nov -30

Source: seekingalpha.com

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Investors Buy Large Volume of Call Options on Starwood Property Trust (NYSE:STWD)

Nov -29

Source: defenseworld.net

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Dividend Harvesting Portfolio Week 247: $24,700 Allocated, $2,737.06 In Projected Dividends

Nov -27

Source: seekingalpha.com

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Should You Forget AGNC Investment and Buy Starwood Property Trust Instead?

Nov -23

Source: fool.com

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Allworth Financial LP Buys 3,324 Shares of Starwood Property Trust, Inc. $STWD

Nov -19

Source: defenseworld.net

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Starwood Property Trust: Buy The Dip On This 11% Yield

Nov -15

Source: seekingalpha.com

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Starwood Property Trust, Inc. $STWD Shares Bought by Advisors Capital Management LLC

Nov -14

Source: defenseworld.net

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Dividend Harvesting Portfolio Week 245: $24,500 Allocated, $2,722.19 In Projected Dividends

Nov -13

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.98%)

6. Segments

Commercial and Residential Lending

Expected Growth: 8.02%

Strong demand for commercial and residential properties, driven by low interest rates and economic growth, contributed to Starwood Property Trust's 8.02% growth. Additionally, the company's diversified portfolio, strategic acquisitions, and effective risk management practices also supported this growth.

Infrastructure Lending

Expected Growth: 8.97%

Starwood Property Trust's 8.97% growth in Infrastructure Lending is driven by increasing demand for renewable energy projects, government initiatives for infrastructure development, and a growing need for digital infrastructure. Additionally, the company's diversified portfolio, strong relationships with borrowers, and ability to provide customized financing solutions have contributed to its growth.

Investing and Servicing

Expected Growth: 8.5%

Starwood Property Trust's 8.5% growth in Investing and Servicing is driven by increasing demand for commercial real estate debt, expansion of lending products, and strategic acquisitions. Additionally, the company's diversified portfolio, strong asset management capabilities, and efficient cost structure contribute to its growth momentum.

Reconciling Items

Expected Growth: 7.4%

Starwood Property Trust's 7.4% growth is driven by increasing originations in its commercial mortgage lending business, expansion into new markets, and a growing portfolio of stabilized assets. Additionally, the company's diversified investment portfolio and strong balance sheet have enabled it to capitalize on market opportunities, further contributing to its growth.

Property

Expected Growth: 4.83%

Starwood Property Trust's 4.83% growth is driven by increasing demand for commercial real estate, particularly in the hospitality sector. Strong occupancy rates, rising room rates, and strategic acquisitions contribute to revenue growth. Additionally, the company's diversified portfolio and focus on high-quality assets mitigate risks, supporting sustainable growth.

Corporate

Expected Growth: 8.32%

Starwood Property Trust's corporate segment growth of 8.32% is driven by increasing demand for commercial real estate, expansion of its lending business, and strategic investments in high-yielding assets. Additionally, the company's diversified portfolio and strong balance sheet have enabled it to capitalize on market opportunities, contributing to its growth momentum.

7. Detailed Products

Commercial Mortgage Loans

Starwood Property Trust, Inc. originates, acquires, and manages a portfolio of commercial mortgage loans secured by income-producing properties, such as office buildings, apartments, and retail centers.

Commercial Real Estate Debt Investments

The company invests in commercial real estate debt, including mezzanine loans, B-notes, and other subordinate debt instruments, to generate income and capital appreciation.

Residential Mortgage Loans

Starwood Property Trust, Inc. originates and acquires residential mortgage loans, including single-family and multifamily mortgages, to generate income and capital appreciation.

Infrastructure Loans

The company originates and acquires infrastructure loans, including construction loans and term loans, to finance infrastructure projects, such as renewable energy facilities and transportation infrastructure.

Equity Investments

Starwood Property Trust, Inc. makes equity investments in commercial properties, including office buildings, apartments, and retail centers, to generate income and capital appreciation.

8. Starwood Property Trust, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Starwood Property Trust, Inc. operates in a niche market, providing commercial mortgage loans and other commercial real estate debt investments. While there are substitutes available, such as other mortgage REITs, the company's focus on commercial mortgage loans and debt investments provides a level of differentiation, reducing the threat of substitutes.

Bargaining Power Of Customers

Starwood Property Trust, Inc.'s customers are primarily institutional investors, such as pension funds and insurance companies. These customers have limited bargaining power due to the company's diversified investor base and the specialized nature of its products.

Bargaining Power Of Suppliers

Starwood Property Trust, Inc. has a diversified supplier base, including various financial institutions and brokers. The company's scale and diversified supplier base reduce the bargaining power of its suppliers.

Threat Of New Entrants

The commercial mortgage REIT industry has high barriers to entry, including significant capital requirements and regulatory hurdles. Additionally, Starwood Property Trust, Inc.'s established brand and expertise in commercial mortgage lending create a high barrier to entry for new entrants.

Intensity Of Rivalry

The commercial mortgage REIT industry is competitive, with several established players. However, Starwood Property Trust, Inc.'s diversified portfolio and expertise in commercial mortgage lending help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 75.75%
Debt Cost 7.97%
Equity Weight 24.25%
Equity Cost 12.30%
WACC 9.02%
Leverage 312.32%

11. Quality Control: Starwood Property Trust, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Starwood Property Trust

A-Score: 7.4/10

Value: 6.3

Growth: 6.1

Quality: 7.1

Yield: 10.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

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Rithm Capital

A-Score: 6.8/10

Value: 6.6

Growth: 2.3

Quality: 6.0

Yield: 10.0

Momentum: 6.0

Volatility: 10.0

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Annaly Capital Management

A-Score: 6.7/10

Value: 5.6

Growth: 3.8

Quality: 5.4

Yield: 10.0

Momentum: 6.0

Volatility: 9.7

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Blackstone Mortgage Trust

A-Score: 6.4/10

Value: 2.7

Growth: 4.4

Quality: 7.2

Yield: 10.0

Momentum: 5.5

Volatility: 8.7

1-Year Total Return ->

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Arbor Realty Trust

A-Score: 5.9/10

Value: 7.0

Growth: 4.6

Quality: 5.9

Yield: 10.0

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

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AGNC Investment

A-Score: 5.8/10

Value: 3.6

Growth: 3.2

Quality: 4.0

Yield: 9.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

18.24$

Current Price

18.24$

Potential

-0.00%

Expected Cash-Flows