Starwood Property Nearly Doubles Earnings from First to Second Quarter
Starwood Property Trust, Inc. (STWD) announced Monday its earnings for Q210, claiming a net income of of $10.8m, or $0.23 per common share, nearly double its first quarter earnings of $5.9m or $0.12 per common share. Net interest margin in the second quarter of 2010 generated from investments was approximately $18m, up from $12.4m in the first quarter. This, the company says, is the reflection of $177m in new investments made during Q210, pushing the real estate investment trust's (REIT) total investment portfolio over $1.3bn. "We are currently generating an 11.5% levered return on our target portfolio and are in the process of seeking additional financing on a number of our existing first mortgage positions which we expect will produce a levered return in excess of 12% on our target portfolio," said chairman and CEO of Starwood, Barry Sternlicht. Second quarter new investments included a $59m first mortgage loan on a Chicago central business district (CBD) office building, a $72m investment in the participation of a B-note with a face value of $90.6m, and approximately $46m of investments in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS). Starwood had approximately $280m of cash and liquid securities as of June 30. The company reported a core earnings (a non-GAAP financial statement) of $12.5m or $0.26 per share for the second quarter. Starwood's GAAP or book value was declared at $18.46 per share ($18.16 per diluted share) at the end of Q210. Subsequent to the second quarter, Starwood reported closing a $350m secured, partial recourse financing facility with Wells Fargo Bank set to mature in August 2013. This is the second loan facility term the company has engaged with Wells Fargo this year. Five other investments closed after the second quarter totaling $197m, including a $138m first mortgage on the Hyatt New Orleans. Investments closed after June 30 will be reported in the Q310 earnings statement. Starwood Property Trust, Inc. is a real estate investment trust (REIT) that focuses on originating, investing in and financing commercial mortgage loans and other commercial real estate-related debt investments. The company was founded in August 2009, thus has no comparable year on year second quarter earnings results. Write to Christine Ricciardi. The author holds no relevant investments.