Section 1: 10-Q (10-Q)

stwd_Current folio_10Q

Table of Contents 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2017

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-34436

 


 

Starwood Property Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

Maryland

 

27-0247747

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

591 West Putnam Avenue

 

 

Greenwich, Connecticut

 

06830

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:

(203) 422-7700


 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

Non-accelerated filer ☐

 

Smaller reporting company ☐

(Do not check if a smaller reporting company)

 

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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of August 3, 2017 was 260,558,434.

 

 

 

 

 


 

Table of Contents 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains certain forward-looking statements, including without limitation, statements concerning our operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words “believe,” “expect,” “anticipate” and other similar expressions. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.

 

These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to:

 

·

factors described in our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and this Quarterly Report on Form 10-Q, including those set forth under the captions “Risk Factors” and “Business”;

 

·

defaults by borrowers in paying debt service on outstanding indebtedness;

 

·

impairment in the value of real estate property securing our loans or in which we invest;

 

·

availability of mortgage origination and acquisition opportunities acceptable to us;

 

·

potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;

 

·

national and local economic and business conditions;

 

·

general and local commercial and residential real estate property conditions;

 

·

changes in federal government policies;

 

·

changes in federal, state and local governmental laws and regulations;

 

·

increased competition from entities engaged in mortgage lending and securities investing activities;

 

·

changes in interest rates; and

 

·

the availability of, and costs associated with, sources of liquidity.

 

In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

2


 

Table of Contents 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

Part I 

Financial Information

 

Item 1. 

Financial Statements

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Comprehensive Income

6

 

Condensed Consolidated Statements of Equity

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

10

 

Note 1 Business and Organization

10

 

Note 2 Summary of Significant Accounting Policies

11

 

Note 3 Acquisitions and Dispositions

17

 

Note 4 Loans

19

 

Note 5 Investment Securities

24

 

Note 6 Properties

28

 

Note 7 Investment in Unconsolidated Entities

29

 

Note 8 Goodwill and Intangibles

29

 

Note 9 Secured Financing Agreements

31

 

Note 10 Unsecured Senior Notes

34

 

Note 11 Loan Securitization/Sale Activities

36

 

Note 12 Derivatives and Hedging Activity

37

 

Note 13 Offsetting Assets and Liabilities

39

 

Note 14 Variable Interest Entities

40

 

Note 15 Related-Party Transactions

41

 

Note 16 Stockholders’ Equity

43

 

Note 17 Earnings per Share

44

 

Note 18 Accumulated Other Comprehensive Income

45

 

Note 19 Fair Value

46

 

Note 20 Income Taxes

51

 

Note 21 Commitments and Contingencies

51

 

Note 22 Segment Data

52

 

Note 23 Subsequent Events

59

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

60

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

87

Item 4. 

Controls and Procedures

89

Part II 

Other Information

 

Item 1. 

Legal Proceedings

90

Item 1A. 

Risk Factors

90

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

90

Item 3. 

Defaults Upon Senior Securities

90

Item 4. 

Mine Safety Disclosures

90

Item 5. 

Other Information

90

Item 6. 

Exhibits

92

 

 

 

3


 

Table of Contents 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

    

June 30, 2017

    

December 31, 2016

Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

261,894

 

$

615,522

Restricted cash

 

 

43,299

 

 

35,233

Loans held-for-investment, net

 

 

6,211,075

 

 

5,847,995

Loans held-for-sale, at fair value

 

 

610,116

 

 

63,279

Loans transferred as secured borrowings

 

 

 —

 

 

35,000

Investment securities ($283,132 and $297,638 held at fair value)

 

 

748,934

 

 

807,618

Properties, net

 

 

1,960,498

 

 

1,944,720

Intangible assets ($38,648 and $55,082 held at fair value)

 

 

191,366

 

 

219,248

Investment in unconsolidated entities

 

 

229,539

 

 

204,605

Goodwill

 

 

140,437

 

 

140,437

Derivative assets

 

 

46,078

 

 

89,361

Accrued interest receivable

 

 

33,346

 

 

28,224

Other assets

 

 

163,648

 

 

101,763

Variable interest entity (“VIE”) assets, at fair value

 

 

53,902,715

 

 

67,123,261

Total Assets 

 

$

64,542,945

 

$

77,256,266

Liabilities and Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

 

$

171,449

 

$

198,134

Related-party payable

 

 

22,778

 

 

37,818

Dividends payable

 

 

126,171

 

 

125,075

Derivative liabilities

 

 

8,051

 

 

3,904

Secured financing agreements, net

 

 

4,750,923

 

 

4,154,126

Unsecured senior notes, net

 

 

2,039,086

 

 

2,011,544

Secured borrowings on transferred loans

 

 

 —

 

 

35,000

VIE liabilities, at fair value

 

 

52,864,038

 

 

66,130,592

Total Liabilities 

 

 

59,982,496

 

 

72,696,193

Commitments and contingencies (Note 21)

 

 

 

 

 

 

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, 265,161,169 issued and 260,554,284 outstanding as of June 30, 2017 and 263,893,806 issued and 259,286,921 outstanding as of December 31, 2016

 

 

2,652

 

 

2,639

Additional paid-in capital

 

 

4,697,497

 

 

4,691,180

Treasury stock (4,606,885 shares)

 

 

(92,104)

 

 

(92,104)

Accumulated other comprehensive income

 

 

55,981

 

 

36,138

Accumulated deficit

 

 

(146,863)

 

 

(115,579)

Total Starwood Property Trust, Inc. Stockholders’ Equity

 

 

4,517,163

 

 

4,522,274

Non-controlling interests in consolidated subsidiaries

 

 

43,286

 

 

37,799

Total Equity 

 

 

4,560,449

 

 

4,560,073

Total Liabilities and Equity 

 

$

64,542,945

 

$

77,256,266

 

See notes to condensed consolidated financial statements.

4


 

Table of Contents 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Operations

(Unaudited, amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

June 30,

 

June 30,

 

    

2017

    

2016

    

2017

    

2016

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income from loans

 

$

120,612

 

$

122,557

 

$

232,495

 

$

240,089

Interest income from investment securities

 

 

12,370

 

 

15,301

 

 

27,594

 

 

34,704

Servicing fees

 

 

18,628

 

 

23,312

 

 

32,730

 

 

48,003

Rental income

 

 

58,966

 

 

37,843

 

 

116,008

 

 

70,520

Other revenues

 

 

993

 

 

979

 

 

1,462

 

 

2,169

Total revenues 

 

 

211,569

 

 

199,992

 

 

410,289

 

 

395,485

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

24,633

 

 

23,767

 

 

49,017

 

 

48,730

Interest expense

 

 

71,317

 

 

57,635

 

 

137,177

 

 

114,155

General and administrative

 

 

32,520

 

 

35,409

 

 

62,949

 

 

68,207

Acquisition and investment pursuit costs

 

 

537

 

 

2,888

 

 

1,208

 

 

4,173

Costs of rental operations

 

 

23,024

 

 

15,852

 

 

43,902

 

 

28,507

Depreciation and amortization

 

 

22,032

 

 

19,073

 

 

44,260

 

 

37,833

Loan loss allowance, net

 

 

(2,694)

 

 

2,029

 

 

(2,999)

 

 

1,268

Other expense

 

 

142

 

 

 —

 

 

900

 

 

100

Total costs and expenses 

 

 

171,511

 

 

156,653

 

 

336,414

 

 

302,973

Income before other income (loss), income taxes and non-controlling interests

 

 

40,058

 

 

43,339

 

 

73,875

 

 

92,512

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Change in net assets related to consolidated VIEs

 

 

77,761

 

 

50,707

 

 

146,931

 

 

46,540

Change in fair value of servicing rights

 

 

(8,001)

 

 

(12,191)

 

 

(16,434)

 

 

(18,930)

Change in fair value of investment securities, net

 

 

(2,493)

 

 

1,319

 

 

(3,664)

 

 

2,072

Change in fair value of mortgage loans held-for-sale, net

 

 

15,406

 

 

13,235

 

 

25,999

 

 

20,126

Earnings from unconsolidated entities

 

 

29,465

 

 

4,479

 

 

32,452

 

 

8,544

Gain (loss) on sale of investments and other assets, net

 

 

5,183

 

 

(90)

 

 

5,127

 

 

155

(Loss) gain on derivative financial instruments, net

 

 

(37,586)

 

 

20,253

 

 

(41,935)

 

 

(4,465)

Foreign currency gain (loss), net

 

 

12,910

 

 

(16,988)

 

 

17,774

 

 

(17,366)

Total other-than-temporary impairment (“OTTI”)

 

 

(109)

 

 

 —

 

 

(109)

 

 

(54)

Noncredit portion of OTTI recognized in other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

54

Net impairment losses recognized in earnings

 

 

(109)

 

 

 —

 

 

(109)

 

 

 —

Loss on extinguishment of debt

 

 

 —

 

 

 —

 

 

(5,916)

 

 

 —

Other income, net

 

 

91

 

 

8,714

 

 

456

 

 

10,729

Total other income (loss)

 

 

92,627

 

 

69,438

 

 

160,681

 

 

47,405

Income before income taxes

 

 

132,685

 

 

112,777

 

 

234,556

 

 

139,917

Income tax provision

 

 

(9,452)

 

 

(706)

 

 

(8,469)

 

 

(800)

Net income 

 

 

123,233

 

 

112,071

 

 

226,087

 

 

139,117

Net income attributable to non-controlling interests

 

 

(5,853)

 

 

(598)

 

 

(6,349)

 

 

(987)

Net income attributable to Starwood Property Trust, Inc.  

 

$

117,380

 

$

111,473

 

$

219,738

 

$

138,130

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share data attributable to Starwood Property Trust, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.45

 

$

0.47

 

$

0.84

 

$

0.58

Diluted

 

$

0.44

 

$

0.47

 

$

0.83

 

$

0.58

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.48

 

$

0.48

 

$

0.96

 

$

0.96

 

See notes to condensed consolidated financial statements.

 

 

5


 

Table of Contents 

 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

    

For the Six Months Ended

 

 

June 30,

 

June 30,

 

    

2017

 

2016

 

2017

 

2016

Net income 

 

$

123,233

 

$

112,071

 

$

226,087

 

$

139,117

Other comprehensive income (loss) (net change by component):

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

 

 2

 

 

(48)

 

 

78

 

 

(321)

Available-for-sale securities

 

 

4,907

 

 

5,951

 

 

6,753

 

 

2,551

Foreign currency translation

 

 

11,005

 

 

(6,733)

 

 

13,012

 

 

668

Other comprehensive income (loss)

 

 

15,914

 

 

(830)

 

 

19,843

 

 

2,898

Comprehensive income 

 

 

139,147

 

 

111,241

 

 

245,930

 

 

142,015

Less: Comprehensive income attributable to non-controlling interests

 

 

(5,853)

 

 

(598)

 

 

(6,349)

 

 

(987)

Comprehensive income attributable to Starwood Property Trust, Inc.  

 

$

133,294

 

$

110,643

 

$

239,581

 

$

141,028

 

See notes to condensed consolidated financial statements.

 

 

6


 

Table of Contents 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Equity

(Unaudited, amounts in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, January 1, 2017

 

263,893,806

 

$

2,639

 

$

4,691,180

 

4,606,885

 

$

(92,104)

 

$

(115,579)

 

$

36,138

 

$

4,522,274

 

$

37,799

 

$

4,560,073

 

Proceeds from DRIP Plan

 

16,407

 

 

 —

 

 

369

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

369

 

 

 —

 

 

369

 

Equity offering costs

 

 —

 

 

 —

 

 

(12)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(12)

 

 

 —

 

 

(12)

 

Equity component of 2023 Convertible Senior Notes issuance

 

 —

 

 

 —

 

 

3,755

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3,755

 

 

 —

 

 

3,755

 

Equity component of 2018 Convertible Senior Notes repurchase

 

 —

 

 

 —

 

 

(18,105)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(18,105)

 

 

 —

 

 

(18,105)

 

Share-based compensation

 

709,462

 

 

 7

 

 

8,072

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

8,079

 

 

 —

 

 

8,079

 

Manager incentive fee paid in stock

 

541,494

 

 

 6

 

 

12,238

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,244

 

 

 —

 

 

12,244

 

Net income

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

219,738

 

 

 —

 

 

219,738

 

 

6,349

 

 

226,087

 

Dividends declared, $0.96 per share

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(251,022)

 

 

 —

 

 

(251,022)

 

 

 —

 

 

(251,022)

 

Other comprehensive income, net

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

19,843

 

 

19,843

 

 

 —

 

 

19,843

 

VIE non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

2,737

 

 

2,737

 

Distributions to non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3,599)

 

 

(3,599)

 

Balance, June 30, 2017

 

265,161,169

 

$

2,652

 

$

4,697,497

 

4,606,885

 

$

(92,104)

 

$

(146,863)

 

$

55,981

 

$

4,517,163

 

$

43,286

 

$

4,560,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2016

 

241,044,775

 

$

2,410

 

$

4,192,844

 

3,553,996

 

$

(72,381)

 

$

(12,286)

 

$

29,729

 

$

4,140,316

 

$

30,627

 

$

4,170,943

 

Proceeds from DRIP Plan

 

9,163

 

 

 —

 

 

177

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

177

 

 

 —

 

 

177

 

Common stock repurchased

 

 —

 

 

 —

 

 

 —

 

1,052,889

 

 

(19,723)

 

 

 —

 

 

 —

 

 

(19,723)

 

 

 —

 

 

(19,723)

 

Share-based compensation

 

876,674

 

 

 9

 

 

14,651

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

14,660

 

 

 —

 

 

14,660

 

Manager incentive fee paid in stock

 

723,249

 

 

 8

 

 

13,215

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

13,223

 

 

 —

 

 

13,223

 

Net income

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

138,130

 

 

 —

 

 

138,130

 

 

987

 

 

139,117

 

Dividends declared, $0.96 per share

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(229,217)

 

 

 —

 

 

(229,217)

 

 

 —

 

 

(229,217)

 

Other comprehensive income, net

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

2,898

 

 

2,898

 

 

 —

 

 

2,898

 

VIE non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(52)

 

 

(52)

 

Contributions from non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

10,417

 

 

10,417

 

Distributions to non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,350)

 

 

(2,350)

 

Balance, June 30, 2016

 

242,653,861

 

$

2,427

 

$

4,220,887

 

4,606,885

 

$

(92,104)

 

$

(103,373)

 

$

32,627

 

$

4,060,464

 

$

39,629

 

$

4,100,093

 

 

See notes to condensed consolidated financial statements.

 

7


 

Table of Contents 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

    

2017

    

2016

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income

 

$

226,087

 

$

139,117

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

Amortization of deferred financing costs, premiums and discounts on secured financing agreements

 

 

9,324

 

 

8,212

Amortization of discounts and deferred financing costs on senior notes

 

 

11,777

 

 

10,628

Accretion of net discount on investment securities

 

 

(8,007)

 

 

(7,349)

Accretion of net deferred loan fees and discounts

 

 

(16,194)

 

 

(23,362)

Share-based compensation

 

 

8,079

 

 

14,660

Share-based component of incentive fees

 

 

12,244

 

 

13,223

Change in fair value of fair value option investment securities

 

 

3,664

 

 

(2,072)

Change in fair value of consolidated VIEs

 

 

(42,593)

 

 

45,899

Change in fair value of servicing rights

 

 

16,434

 

 

18,930

Change in fair value of loans held-for-sale

 

 

(25,999)

 

 

(20,126)

Change in fair value of derivatives

 

 

39,223

 

 

2,332

Foreign currency (gain) loss, net

 

 

(17,590)

 

 

17,169

Gain on sale of investments and other assets

 

 

(5,127)

 

 

(155)

Impairment charges

 

 

867

 

 

 —

Loan loss allowance, net

 

 

(2,999)

 

 

1,268

Depreciation and amortization

 

 

42,701

 

 

34,664

Earnings from unconsolidated entities

 

 

(32,452)

 

 

(8,544)

Distributions of earnings from unconsolidated entities

 

 

4,284

 

 

9,817

Bargain purchase gain

 

 

 —

 

 

(8,406)

Loss on extinguishment of debt

 

 

5,916

 

 

 —

Origination and purchase of loans held-for-sale, net of principal collections

 

 

(991,343)

 

 

(488,448)

Proceeds from sale of loans held-for-sale

 

 

470,478

 

 

475,333

Changes in operating assets and liabilities:

 

 

 

 

 

 

Related-party payable, net

 

 

(15,040)

 

 

(20,749)

Accrued and capitalized interest receivable, less purchased interest

 

 

(39,143)

 

 

(41,151)

Other assets

 

 

(2,391)

 

 

6,715

Accounts payable, accrued expenses and other liabilities

 

 

2,763

 

 

(29,055)

Net cash (used in) provided by operating activities

 

 

(345,037)

 

 

148,550

Cash Flows from Investing Activities:

 

 

 

 

 

 

Origination and purchase of loans held-for-investment

 

 

(1,228,952)

 

 

(997,421)

Proceeds from principal collections on loans

 

 

869,297

 

 

1,193,643

Proceeds from loans sold

 

 

37,079

 

 

121,276

Purchase of investment securities

 

 

(7,433)

 

 

(350,642)

Proceeds from sales of investment securities

 

 

11,134

 

 

1,269

Proceeds from principal collections on investment securities

 

 

86,259

 

 

47,544

Real estate business combinations, net of cash acquired

 

 

 —

 

 

(91,186)

Proceeds from sale of properties

 

 

18,256

 

 

 —

Additions to properties and other assets

 

 

(25,503)

 

 

(5,521)

Investment in unconsolidated entities

 

 

 —

 

 

(3,854)

Distribution of capital from unconsolidated entities

 

 

3,235

 

 

1,244

Payments for purchase or termination of derivatives

 

 

(39,755)

 

 

(15,144)

Proceeds from termination of derivatives

 

 

22,981

 

 

27,447

Return of investment basis in purchased derivative asset

 

 

121

 

 

137

Net cash used in investing activities

 

 

(253,281)

 

 

(71,208)

 

See notes to condensed consolidated financial statements.

8


 

Table of Contents 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

    

2017

    

2016

Cash Flows from Financing Activities:

 

 

 

 

 

 

Proceeds from borrowings

 

$

2,134,245

 

$

2,059,599

Principal repayments on and repurchases of borrowings

 

 

(1,590,421)

 

 

(1,711,117)

Payment of deferred financing costs

 

 

(8,211)

 

 

(6,437)

Proceeds from common stock issuances

 

 

369

 

 

177

Payment of equity offering costs

 

 

(647)

 

 

 —

Payment of dividends

 

 

(249,925)

 

 

(229,151)

Contributions from non-controlling interests

 

 

 —

 

 

10,417

Distributions to non-controlling interests

 

 

(3,599)

 

 

(2,350)

Purchase of treasury stock

 

 

 —

 

 

(19,723)

Issuance of debt of consolidated VIEs

 

 

10,188

 

 

596

Repayment of debt of consolidated VIEs

 

 

(79,099)

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