EarningsQ2 2026 Earnings Report
DE:VSP Q2 2026 EPS Results
Actual EPS€0.36
Consensus EPS€0.36
Beat/MissMet expectations
One Year Ago EPS€0.38
DE:VSP Q2 2026 Revenue Results
Actual Revenue€460.52M
Expected Revenue€465.54M
Beat/MissMissed by -€5.02M
YoY Revenue Growth+8.43%
Earnings Announcement Details
QuarterQ2 2026
Date08/06/2026
TimeBefore Open
Conference CallThursday, August 6, 2026
DE:VSP Upcoming Earnings
Starwood Property's next earnings date is estimated for November 6, 2026, based on past reporting schedules.
Q2 2026 Earnings Call Audio
DE:VSP Q2 2026 Earnings Call
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Q2 2026 Earnings Slide Deck
Q2 2026 Earnings Call Summary
Earnings Call Sentiment|Positive
The call was broadly optimistic about Starwood Property Trust's diversified platform, liquidity, capital markets access, investment deployment, credit stabilization, and long-term earnings recovery. However, the company is not currently covering its dividend, holds a sizable nonaccrual and REO portfolio, expects a $47 million third-quarter realized loss from planned asset sales, recorded higher reserves, and faces multifamily, refinancing, construction, and valuation challenges. The positive operational and strategic developments significantly outweighed the stated challenges.Company Guidance
Second-Quarter Distributable Earnings
Distributable earnings were $152 million, or $0.40 per share, in the second quarter.
No New Nonaccrual, 5-Rated Loans, or REO
The company reported no new nonaccrual loans, new 5-rated loans, or new REO in the quarter or year, while resolution activity gained momentum.
Planned Resolution of Underperforming Assets
The company is under contract or in discussions to sell 3 REO assets and multiple units in a New York City residential project. The transactions are expected to generate $148 million of cash proceeds and resolve $195 million of assets on a DE basis and $160 million on a GAAP basis in the third quarter, representing 10% of the current nonaccrual and REO balance. Management is on track, subject to market conditions, to resolve approximately $800 million, or 40%, of current nonaccrual and REO assets by year-end.
Substantial Reserves Against Nonaccrual and REO Assets
Total reserves against nonaccrual and REO assets were $706 million, consisting of $485 million of CECL reserves and $221 million of REO reserves, equal to $1.97 per share and reflected in the undepreciated book value of $18.02.
Record Commercial Lending Portfolio
Commercial lending originations totaled $1.4 billion, with $754 million funded plus another $250 million of preexisting commitments, for more than $1 billion funded in the quarter. After $447 million of repayments, the funded loan portfolio grew to a record $17.3 billion.
Strong Year-to-Date Investment Deployment
The company deployed $2.5 billion across its businesses during the quarter and another $1.7 billion in July, bringing year-to-date investments to $6.7 billion. Management said it is on pace for a record year of investment activity, with the third quarter expected to be its strongest origination quarter.
Commercial and Residential Lending Segment Contribution
Commercial and residential lending contributed $186 million of distributable earnings, or $0.49 per share, in the quarter. The residential lending portfolio ended at $2.4 billion, up $164 million, while the retained RMBS portfolio declined to $313 million after the company exercised a securitization call option and moved most financing to repo at SOFR plus 150 basis points.
Woodstar Affordable Housing Rent Increases
Woodstar began rolling out authorized HUD rent increases of 8.4% on July 1, with the earnings impact expected to appear beginning next quarter. Average rents across the portfolio remain 38% below market, which management said should support continued high occupancy and allow most of the increases to be implemented.
Potential Woodstar Refinancing Upside
The company has $416 million of Woodstar debt maturing over the next 6 months and is working to refinance it. Based on portfolio appreciation and NOI growth, management anticipates approximately $140 million of upside, including a $110 million share that could be reinvested to increase future earnings.
Net Lease Portfolio Growth and Operating Performance
Net lease distributable earnings increased to $0.05 per share from $0.03 in the prior quarter. The company closed $179 million of purchases at a blended 7.39% cap rate, bringing post-acquisition purchases to $532 million at a 7.45% blended cap rate. The portfolio reached $2.7 billion across 27 properties in 44 states, with a 16.8-year weighted average lease term, 2.3% average annual rent escalations, 100% occupancy, and zero defaults.
Net Lease Build-to-Suit Revenue Potential
The net lease portfolio included $91 million of build-to-suit projects under construction, with $65 million of incremental costs to complete. All projects have executed leases and are expected to add $9.9 million of annual base rent upon completion.
Capital Structure Optimization
The company completed a $321 million ABS financing at a 5.47% weighted average fixed rate. It also executed $2.1 billion of corporate debt transactions in the quarter, including $1.1 billion of senior unsecured notes, a $275 million Term Loan B upsize, and repricing of the existing $696 million Term Loan B to SOFR plus 200 basis points, 25 basis points inside prior pricing.
Extended Debt Maturities and Liquidity
Subsequent to quarter-end, the company repaid $400 million of July 2026 high-yield notes and prepaid $500 million of January 2027 high-yield notes. There are no additional corporate debt maturities until July 2027, and weighted average corporate debt maturities increased to 3.7 years. Current liquidity was $1.2 billion, excluding potential proceeds from refinancing, asset sales, direct leverage, and REO sales.
Conservative Leverage and Unsecured Coverage
The company ended the quarter with debt to undepreciated equity of 2.74x. Its unencumbered asset pool was $6.9 billion against $4.5 billion of unsecured debt, representing a 1.5x coverage ratio.
Infrastructure Lending Credit Quality
The infrastructure lending portfolio ended at $3.1 billion after $441 million of commitments and similar-sized repayments. The portfolio has 92% of loans rated 1 or 2 internally, only one watch-list credit with $16 million of market value, and 97% of loans benefiting from public or private Moody's ratings. The company has gone 10 quarters without downgrading a credit to watch-list status.
Infrastructure Financing and Asset Sale Opportunity
With the pricing of its seventh SIF CLO of the year, 75% of infrastructure assets benefit from term, non-mark-to-market financing. The company is also under contract to sell an infrastructure asset acquired through a debt-for-equity swap, which management expects to produce a material gain to distributable earnings and book value.
Improving Office Credit Outcomes
A previously discussed $300 million Brooklyn office building reached 100% occupancy after the borrower signed a third and final 32-year lease to a credit tenant, allowing the remaining loan balance to return to accrual status. Two additional office loans repaid at par for $171 million in total, reducing U.S. office exposure to 7.6% of assets and global office exposure to 8.9%, both the lowest levels in company history.
Property Conversion Progress
The 1.2 million-square-foot K Street office-to-multifamily conversion received residential conversion permits in June, and demolition was completed with construction started. The project is expected to be completed in 2028.
Special Servicing and Conduit Activity
Special servicing fees were $20 million in the quarter. The active special servicing portfolio increased by $1 billion to $10.9 billion, supported by $1.3 billion of new SASB transfers, while the named servicing portfolio stood at $93.6 billion. Starwood Mortgage Capital securitized $320 million of loans, more than double the prior quarter's volume, with profit margins in line with historic levels.
REO Equity Portfolio Reduction
The REO equity portfolio now has 5 assets remaining after the company sold 1 asset during the quarter for a $2 million distributable earnings gain.
Capital Markets Access and Ratings
Fitch and Moody's affirmed the company's ratings at BB+ and Ba2, respectively, citing diversity, leverage, liquidity, stable earnings, and credit track record. The company also received the NAREIT Gold Investor CARE Award for the 10th time in the mortgage REIT category in the last 12 years.
Stock Repurchases and Management Ownership
The company repurchased $30 million of stock year to date under its approved buyback program. Management and the board own more than $350 million of company stock alongside shareholders.
Diversified Business Model and New Business Line
Management emphasized that only approximately half of revenue comes from commercial real estate lending and that the company has more than $32 billion of assets across 8 distinct business lines. Management also expects to enter a new business line next quarter that is largely underserved after regional banks reduced their capital allocation.
Positive Real Estate and Origination Backdrop
Management described improving commercial real estate conditions, including higher absorption, less supply, and gradually recovering transaction activity. It also reported robust pipelines across businesses and continued ability to originate investments with double-digit yields.
Data Center Lending Exposure
The company said it has approximately $1.8 billion of future-funded data center exposure within its roughly $30 billion book, generally at higher yields than are available in the current market. Management said its largest data center exposure is expected to pay off later this year after construction is complete.
Dividend Policy Maintained
Management said it is not considering changing its dividend policy at the moment and remains confident in its ability to restore earnings power and dividend coverage.
DE:VSP Earnings History
The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.
Beat
Missed