Starwood Property Trust Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 06:00

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the information included elsewhere in this Quarterly Report on Form 10-Q and in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (our "Form 10-K"). This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements. See "Special Note Regarding Forward-Looking Statements" at the beginning of this Quarterly Report on Form 10-Q.
Overview
Starwood Property Trust, Inc. ("STWD" and, together with its subsidiaries, "we" or the "Company") is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering. We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in the United States ("U.S."), Europe and Australia. As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions.
We have four reportable business segments as of September 30, 2026 and we refer to the investments within these segments as our target assets:
•Real estate commercial and residential lending (the "Commercial and Residential Lending Segment")-engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages ("residential loans"), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities ("CMBS"), residential mortgage-backed securities ("RMBS") and other real estate and real estate-related debt investments in the U.S., Europe and Australia (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.
•Infrastructure lending (the "Infrastructure Lending Segment")-engages primarily in originating, acquiring, financing and managing infrastructure debt investments.
•Real estate property (the "Property Segment")-engages primarily in acquiring and managing equity interests in stabilized and to be stabilized commercial real estate. This includes multifamily properties, multi-tenant medical office net lease properties and diversified single-tenant triple net lease properties, all of which are held for investment.
•Real estate investing and servicing (the "Investing and Servicing Segment")-includes (i) a servicing business in the U.S. that manages and works out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts.
Our segments exclude the consolidation of securitization variable interest entities ("VIEs"), principally representing CMBS trust vehicles that we consolidate by virtue of our role as special servicer. However, they include securitized financing VIEs such as collateralized loan obligations ("CLOs"), single asset securitizations ("SASBs") and asset-backed securitizations ("ABSs").
Refer to Note 1 of our condensed consolidated financial statements included herein (the "Condensed Consolidated Financial Statements") for further discussion of our business and organization.
Developments During the Third Quarter of 2026
Commercial and Residential Lending Segment
•Originated or acquired $2.4 billion of commercial loans during the quarter, including the following:
◦$587.9 million first mortgage loan secured by an industrial storage portfolio located in various U.S. states, of which the Company funded $558.5 million. During the quarter, we sold $94.7 million of the funded balance to an affiliate of our Manager. Refer to Notes 12 and 16 to the Condensed Consolidated Financial Statements for further discussion.
◦€373.2 million ($428.1 million) first mortgage loan secured by a last-mile logistics portfolio in France, of which the Company funded $266.0 million.
◦$401.3 million first mortgage loan for the construction of a data center in Wisconsin pre-leased to an investment grade tenant, of which the Company funded $98.9 million.
◦$277.0 million first mortgage and mezzanine loan for the construction of a mixed-use development in Florida, of which the Company funded $24.3 million.
◦$141.2 million first mortgage loan secured by a hotel in Florida, which the Company fully funded.
◦$135.0 million first mortgage and mezzanine loan secured by a multifamily property in Florida, which the Company fully funded.
•Funded $235.7 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $1.1 billion ($479.4 million, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
•Sold commercial real estate previously acquired through foreclosure for gross proceeds of $108.5 million during the period:
◦A multifamily property in Dallas, Texas, acquired in October 2024, for $74.0 million, recognizing a net loss of $10.8 million.
◦A multifamily property in Phoenix, Arizona, acquired in November 2024, for $22.6 million, recognizing a net loss of $0.8 million.
◦Two units in a residential conversion project in New York, acquired in April 2021, for $11.9 million, recognizing no gain or loss.
•Redeemed at par the third party financing for our STWD 2021-FL2 and STWD 2022-FL3 CLOs issued in May 2021 and February 2022 for $279.9 million and $299.2 million, respectively, plus accrued interest. We amended an existing commercial credit facility, increasing the maximum facility size by $1.2 billion to $3.0 billion, in part to finance these redemptions.
Infrastructure Lending Segment
•Committed $505.1 million for new infrastructure loans, of which the Company funded $402.3 million, and also funded $34.0 million of pre-existing infrastructure loan commitments.
•Received proceeds of $388.8 million from principal repayments on our infrastructure loans and bonds.
•Amended a credit facility, increasing the facility size by $125.0 million to $500.0 million, reducing the spread by 15 bps and extending the maturity date from August 2028 to September 2030.
Property
•Acquired 10 additional net lease properties for $32.0 million and sold four properties subject to two master leases for $6.3 million, resulting in an immaterial gain.
•Refinanced a pool of our Fundamental net lease properties in July 2026 through an ABS, FI Series 2026-2, with $321.0 million of third party financing at a weighted average fixed rate of 5.47% and weighted average maturity of 5.0 years.
•Amended an existing $600.0 million revolving warehouse credit facility in July 2026 which finances Fundamental's net lease property acquisitions, reducing the spread by 60 bps.
•Refinanced $36.4 million of the Woodstar Fund investments' mortgage debt in September 2026 with $97.5 million of new debt that carries an initial term of 10 years.
Investing and Servicing
•Originated commercial conduit loans of $214.9 million.
•Received proceeds of $211.0 million from sales of previously originated commercial conduit loans.
•Sold CMBS for gross proceeds of $4.8 million.
•Obtained one new special servicing assignment for a CMBS trust with a total unpaid principal balance of $445.0 million, while $2.5 billion matured and $673.3 million transferred, bringing our total named special servicing portfolio to $90.8 billion.
Corporate
•Repurchased 6,679,735 shares of common stock with a weighted average repurchase price of $16.11 per share for a total cost of $107.8 million.
•Issued $500.0 million of 5.875% Senior Notes due 2029 in July 2026.
•Repaid the entire $400.0 million of 3.625% Senior Notes at maturity on July 15, 2026.
•Early redeemed the entire $500.0 million of 4.375% Senior Notes due January 2027 on July 16, 2026. In connection with the redemption, we paid $6.3 million to unwind the related interest rate swap.
Developments During the Nine Months Ended September 30, 2026
Commercial and Residential Lending Segment
•Originated or acquired $5.4 billion of commercial loans during the period, including the following:
◦$727.2 million first mortgage loan for the construction of a data center in Virginia pre-leased to an investment grade tenant, of which the Company funded $305.2 million.
◦$598.7 million first mortgage loan for the construction of a data center in Texas pre-leased to an investment grade tenant, of which the Company funded $139.4 million.
◦$587.9 million first mortgage loan secured by an industrial storage portfolio located in various U.S. states, of which the Company funded $558.5 million. During the quarter, we sold $94.7 million of the funded balance to an affiliate of our Manager. Refer to Notes 12 and 16 to the Condensed Consolidated Financial Statements for further discussion.
◦A$625.1 million ($442.1 million) first mortgage loan, representing a 66% participation in the overall loan, secured by a hospitality asset in Australia, of which the Company funded $366.8 million.
◦€373.2 million ($428.1 million) first mortgage loan secured by a last-mile logistics portfolio in France, of which the Company funded $266.0 million.
◦$401.3 million first mortgage loan for the construction of a data center in Wisconsin pre-leased to an investment grade tenant, of which the Company funded $98.9 million.
◦$277.0 million first mortgage and mezzanine loan for the construction of a mixed-use development in Florida, of which the Company funded $24.3 million.
◦$245.0 million first mortgage and mezzanine loan secured by a 666-unit high-rise multifamily property in California, which the Company fully funded.
◦$191.9 million first mortgage and mezzanine loan secured by an industrial portfolio in California, of which the Company funded $174.4 million.
◦$160.0 million first mortgage loan for the construction of a data center in Virginia pre-leased to an investment grade tenant, of which the Company funded $35.0 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
•Funded $630.3 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $2.4 billion ($1.1 billion, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
•Sold commercial real estate previously acquired through foreclosure for gross proceeds of $160.0 million during the period:
◦A multifamily property in Dallas, Texas, acquired in October 2024, for $74.0 million, recognizing a net loss of $10.8 million.
◦A multifamily property in Phoenix, Arizona, acquired in November 2024, for $22.6 million, recognizing a net loss of $0.8 million.
◦A multifamily property in Conyers, Georgia, acquired in February 2025, for $40.0 million, recognizing a net gain of $0.3 million. In connection therewith, we provided $32.0 million of three-year senior secured financing to the purchaser.
◦Four units in a residential conversion project in New York, acquired in April 2021, for $23.4 million, recognizing no gain or loss.
•Acquired the additional remaining $143.8 million senior mortgage loan interest secured by an industrial complex in Long Island City, New York, for which we have an existing $275.9 million first mortgage and mezzanine loan interest, in order to preserve our rights as the mezzanine lender.
•Transferred $229.8 million of residential loans from VIE assets to loans held-for-investment upon redemption of a consolidated RMBS trust.
•Redeemed at par the third party financing for our STWD 2021-FL2 and STWD 2022-FL3 CLOs issued in May 2021 and February 2022 for $279.9 million and $299.2 million, respectively, plus accrued interest. We amended an existing commercial credit facility, increasing the maximum facility size by $1.2 billion to $3.0 billion, in part to finance these redemptions.
•Amended several other credit facilities, resulting in an aggregate net upsize of $435.0 million and extended the weighted average maturity on these facilities by 1.2 years to 2.0 years.
Infrastructure Lending Segment
•Committed $1.5 billion for new infrastructure loans and bonds, of which the Company funded $1.3 billion, and also funded $59.7 million of pre-existing infrastructure loan commitments.
•Received proceeds of $1.2 billion from principal repayments on our infrastructure loans and bonds.
•Amended a credit facility, increasing the facility size by $125.0 million to $500.0 million, reducing the spread by 15 bps and extending the maturity date from August 2028 to September 2030.
•Refinanced a pool of our infrastructure loans held-for-investment in January 2026 through a CLO, Starwood 2026-SIF7. The CLO has a contractual maturity of January 2038 and a weighted average cost of financing of SOFR + 1.91%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $600.0 million of notes, of which $496.2 million of notes were purchased by third party investors and $103.8 million of subordinated notes were retained by us. In connection therewith, we redeemed at par the third party financing for our STWD 2024-SIF3 CLO for $330.0 million and contributed certain loans previously held in that CLO to Starwood 2026-SIF7.
Property
•Acquired 58 additional net lease properties for $340.6 million and sold 17 properties subject to three master leases for $31.1 million, recognizing a total net gain of $0.6 million.
•Refinanced a pool of our Fundamental net lease properties in July 2026 through an ABS, FI Series 2026-2, with $321.0 million of third party financing at a weighted average fixed rate of 5.47% and weighted average maturity of 5.0 years.
•Amended an existing $600.0 million revolving warehouse credit facility in July 2026 which finances Fundamental's net lease property acquisitions, reducing the spread by 60 bps.
•Refinanced $36.4 million of the Woodstar Fund investments' mortgage debt in September 2026 with $97.5 million of new debt that carries an initial term of 10 years.
•Entered into a new revolving warehouse credit facility in April 2026 to finance Fundamental's net lease property acquisitions. The facility totals $1.0 billion, of which $500.0 million is committed and $500.0 million is uncommitted. It has a five-year term and an advance rate of up to 70%.
•Refinanced a pool of our Fundamental net lease properties in March 2026 through an ABS, FI Series 2026-1, with $466.4 million of third party financing at a weighted average fixed rate of 5.06% and weighted average maturity of 5.4 years. In connection therewith, we redeemed at par the third party financing for our ABS, FI Series 2023-1, which had a weighted average fixed rate of 6.65%, for $323.6 million plus accrued interest.
Investing and Servicing Segment
•Originated or acquired commercial conduit loans of $739.5 million.
•Received proceeds of $735.0 million from sales of previously originated or acquired commercial conduit loans.
•Acquired CMBS for a purchase price of $53.3 million, of which $1.4 million related to non-controlling interests, and sold CMBS for total gross proceeds of $21.9 million.
•Obtained six new special servicing assignments for CMBS trusts with a total unpaid principal balance of $3.5 billion, while $8.1 billion matured and $2.1 billion transferred, bringing our total named special servicing portfolio to $90.8 billion.
•Sold a hospitality asset in New York City for gross proceeds of $13.1 million and recognized a gain of $2.3 million. The property had been acquired through foreclosure in June 2024 after the related loan was acquired as nonperforming in October 2021.
Corporate
•Repurchased 8,388,073 shares of common stock with a weighted average repurchase price of $16.39 per share for a total cost of $137.7 million.
•Issued $500.0 million of 5.875% Senior Notes due 2029 in July 2026.
•Repaid the entire $400.0 million of 3.625% Senior Notes at maturity on July 15, 2026.
•Early redeemed the entire $500.0 million of 4.375% Senior Notes due January 2027 on July 16, 2026. In connection with the redemption, we paid $6.3 million to unwind the related interest rate swap.
•Amended our $696.5 million term loan facility due September 2032 in May 2026, increasing the facility by $275.0 million to $971.5 million, and reducing the spread by 25 bps from SOFR + 2.25% to SOFR + 2.00%.
•Issued $600.0 million of 6.125% Senior Notes due 2031 in May 2026 and swapped the notes to a floating rate of SOFR + 2.22%.
Results of Operations
The discussion below is based on accounting principles generally accepted in the United States of America ("GAAP") and therefore reflects the elimination of certain key financial statement line items related to the consolidation of securitization variable interest entities ("VIEs"), particularly within revenues and other income, as discussed in Note 2 to the Condensed Consolidated Financial Statements. For a discussion of our results of operations excluding the impact of Accounting Standards Codification ("ASC") Topic 810 as it relates to the consolidation of securitization VIEs, refer to the section captioned "Non-GAAP Financial Measures."
The following table compares our summarized results of operations for the three months ended September 30, 2026 and June 30, 2026 and for the nine months ended September 30, 2026 and 2025 by business segment (amounts in thousands):
For the Three Months Ended
For the Nine Months Ended
Revenues: September 30, 2026 June 30, 2026 $ Change September 30, 2026 September 30, 2025 $ Change
Commercial and Residential Lending Segment $ 377,533 $ 364,214 $ 13,319 $ 1,086,328 $ 1,012,499 $ 73,829
Infrastructure Lending Segment 70,512 68,946 1,566 202,753 206,527 (3,774)
Property Segment 68,457 64,189 4,268 193,946 79,222 114,724
Investing and Servicing Segment 66,410 52,662 13,748 199,909 173,548 26,361
Corporate 888 822 66 2,380 1,324 1,056
Securitization VIE eliminations (37,947) (37,165) (782) (113,339) (121,779) 8,440
545,853 513,668 32,185 1,571,977 1,351,341 220,636
Costs and expenses:
Commercial and Residential Lending Segment 539,855 226,739 313,116 956,457 602,429 354,028
Infrastructure Lending Segment 44,231 45,784 (1,553) 131,788 139,536 (7,748)
Property Segment 77,880 73,318 4,562 223,427 102,616 120,811
Investing and Servicing Segment 30,401 36,859 (6,458) 99,962 107,338 (7,376)
Corporate 147,569 142,322 5,247 433,773 352,840 80,933
Securitization VIE eliminations (200) (254) 54 (598) (612) 14
839,736 524,768 314,968 1,844,809 1,304,147 540,662
Other income (loss):
Commercial and Residential Lending Segment (81,657) (997) (80,660) (95,600) 88,780 (184,380)
Infrastructure Lending Segment 5,118 3,027 2,091 9,097 112 8,985
Property Segment 38,442 12,231 26,211 65,294 (993) 66,287
Investing and Servicing Segment (1,820) 15,397 (17,217) 15,626 50,540 (34,914)
Corporate (88,181) (34,240) (53,941) (143,854) 41,707 (185,561)
Securitization VIE eliminations 37,747 36,911 836 112,741 121,167 (8,426)
(90,351) 32,329 (122,680) (36,696) 301,313 (338,009)
(Loss) income before income taxes:
Commercial and Residential Lending Segment (243,979) 136,478 (380,457) 34,271 498,850 (464,579)
Infrastructure Lending Segment 31,399 26,189 5,210 80,062 67,103 12,959
Property Segment 29,019 3,102 25,917 35,813 (24,387) 60,200
Investing and Servicing Segment 34,189 31,200 2,989 115,573 116,750 (1,177)
Corporate (234,862) (175,740) (59,122) (575,247) (309,809) (265,438)
Securitization VIE eliminations - - - - - -
(384,234) 21,229 (405,463) (309,528) 348,507 (658,035)
Income tax benefit (provision) 3,069 (6,224) 9,293 790 (17,780) 18,570
Net income attributable to non-controlling interests
(8,543) (8,448) (95) (22,535) (16,098) (6,437)
Net (loss) income attributable to Starwood Property Trust, Inc. $ (389,708) $ 6,557 $ (396,265) $ (331,273) $ 314,629 $ (645,902)
Three Months Ended September 30, 2026 Compared to the Three Months Ended June 30, 2026
Commercial and Residential Lending Segment
Revenues
For the three months ended September 30, 2026, revenues of our Commercial and Residential Lending Segment increased $13.3 million to $377.5 million, compared to $364.2 million for the three months ended June 30, 2026. This was primarily due to a $14.0 million increase in interest income from loans. The increase in interest income from loans was comprised of (i) an $11.5 million increase from commercial loans, primarily reflecting higher average loan balances and prepayment related income, and (ii) a $2.5 million increase from residential loans, primarily reflecting the transfer of $229.8 million of residential loans to loans held-for-investment upon our redemption of a consolidated RMBS trust in late June 2026. Interest income from investment securities was relatively unchanged between quarters, reflecting a $1.8 million increase from a new commercial lending investment offset by a $1.8 million decrease from RMBS investments, primarily due to the RMBS trust redemption.
Costs and Expenses
For the three months ended September 30, 2026, costs and expenses of our Commercial and Residential Lending Segment increased $313.2 million to $539.9 million, compared to $226.7 million for the three months ended June 30, 2026. This was primarily due to increases of $307.0 million in credit loss provision and $6.3 million in interest expense. The increase in the credit loss provision is the result of increased risk of repayment shortfalls associated with higher projected interest rates. Because our loan portfolio is predominantly floating-rate, higher rates create an increased debt service burden for our borrowers. Higher rates also contribute to higher capitalization rates and lower property values, placing pressure on borrowers' ability to refinance or sell the underlying properties. The increase in interest expense associated with the various financing facilities used to fund a portion of this segment's investment portfolio was primarily due to higher average borrowings outstanding.
Net Interest Income (amounts in thousands)
For the Three Months Ended
September 30, 2026 June 30, 2026 Change
Interest income from loans $ 341,142 $ 327,151 $ 13,991
Interest income from investment securities 15,409 15,344 65
Interest expense (167,070) (160,750) (6,320)
Net interest income $ 189,481 $ 181,745 $ 7,736
For the three months ended September 30, 2026, net interest income of our Commercial and Residential Lending Segment increased $7.7 million to $189.5 million, compared to $181.7 million for the three months ended June 30, 2026. This reflects the increase in interest income, partially offset by the increase in interest expense on our secured financing facilities, both as discussed in the sections above.
During the three months ended September 30, 2026 and June 30, 2026, the weighted average unlevered yields on the Commercial and Residential Lending Segment's loans and investment securities, excluding retained RMBS and loans for which interest income is not recognized, were as follows:
For the Three Months Ended
September 30, 2026 June 30, 2026
Commercial 7.4 % 7.4 %
Residential 5.1 % 4.8 %
Overall 7.1 % 7.1 %
The weighted average unlevered yield on our commercial loans remained consistent between quarters. The unlevered yield on our residential loans increased primarily due to the redemption of the RMBS trust in late June, which transferred in loans with higher average yields, and an overall decline in fair value of residential loans in the third quarter of 2026.
During both the three months ended September 30, 2026 and June 30, 2026, the Commercial and Residential Lending Segment's weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 5.6%. Interest rate hedges had the effect of reducing the weighted average borrowing costs to 5.4% and 5.3% during the three months ended September 30, 2026 and June 30, 2026, respectively.
Other Loss
For the three months ended September 30, 2026, other loss of our Commercial and Residential Lending Segment increased $80.7 million to $81.7 million compared to $1.0 million for the three months ended June 30, 2026. This was primarily due to (i) a $108.7 million greater decrease in fair value of residential loans primarily reflecting higher interest rates and, to a lesser extent, wider credit spreads, (ii) $32.2 million of impairments recognized in the third quarter on two multifamily properties previously acquired through foreclosure and (iii) $11.6 million of losses on sales of two other multifamily properties acquired through foreclosure, partially offset by (iv) a $63.1 million increased net gain on derivatives and (v) a $5.2 million decreased foreign currency loss. The increased net gain on derivatives in the third quarter of 2026 reflects (i) a $59.0 million higher gain on interest rate swaps principally related to residential loans and (ii) a $4.1 million decreased loss on foreign currency hedges. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The decreased foreign currency loss and loss on foreign currency hedges reflects the weakening of the U.S. dollar against the pound sterling ("GBP") and Australian dollar ("AUD"), partially offset by a strengthening against the Euro ("EUR"), in the third quarter of 2026 relative to a similar pattern in the second quarter of 2026.
Infrastructure Lending Segment
Revenues
For the three months ended September 30, 2026, revenues of our Infrastructure Lending Segment increased $1.6 million to $70.5 million, compared to $68.9 million for the three months ended June 30, 2026. This was primarily due to a $1.6 million increase in interest income from investment securities, primarily reflecting a new investment in late June 2026.
Costs and Expenses
For the three months ended September 30, 2026, costs and expenses of our Infrastructure Lending Segment decreased $1.6 million to $44.2 million, compared to $45.8 million for the three months ended June 30, 2026. This was primarily due to (i) a $1.2 million decrease in general, administrative and other expenses and (ii) a $0.5 million decrease in credit loss provision to a reversal of $0.2 million in the third quarter compared to a provision of $0.3 million in the second quarter, partially offset by (iii) a $0.2 million increase in interest expense.
Net Interest Income (amounts in thousands)
For the Three Months Ended
September 30, 2026 June 30, 2026 Change
Interest income from loans $ 66,654 $ 66,991 $ (337)
Interest income from investment securities 2,090 481 1,609
Interest expense (38,810) (38,625) (185)
Net interest income $ 29,934 $ 28,847 $ 1,087
For the three months ended September 30, 2026, net interest income of our Infrastructure Lending Segment increased $1.1 million to $29.9 million, compared to $28.8 million for the three months ended June 30, 2026. The increase reflects the increase in interest income from investment securities, partially offset by a decrease in interest income from loans and the increase in interest expense on the secured financing facilities used to fund this segment's investment portfolio, as discussed in the sections above.
During the three months ended September 30, 2026 and June 30, 2026, the weighted average unlevered yields on the Infrastructure Lending Segment's loans and investment securities, excluding those for which interest income is not recognized, were 8.5% and 8.4%, respectively.
During the three months ended September 30, 2026 and June 30, 2026, the Infrastructure Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.3% and 6.2%, respectively.
Other Income
For the three months ended September 30, 2026, other income of our Infrastructure Lending Segment increased $2.1 million to $5.1 million, compared to $3.0 million for the three months ended June 30, 2026. This was due to (i) a $3.1 million increased gain on derivatives, representing primarily interest rate swaps on variable rate borrowings which finance fixed rate investment securities, partially offset by (ii) a $1.0 million decrease in earnings from unconsolidated entities.
Property Segment
Change in Results by Portfolio (amounts in thousands)
$ Change from prior period
Revenues Depreciation and amortization Other costs and
expenses 		Gain (loss) on derivative
financial instruments 		Other income (loss) Income (loss) before
income taxes
Fundamental
$ 3,888 $ 1,547 $ 2,178 $ 6,407 $ 62 $ 6,632
Medical Office Portfolio 351 70 659 31 - (347)
Woodstar Fund 31 - 1 - 18,131 18,161
D.C. Multifamily Conversion
- - - - 1,587 1,587
Other/Corporate (2) - 107 - (7) (116)
Total $ 4,268 $ 1,617 $ 2,945 $ 6,438 $ 19,773 $ 25,917
See Notes 6 and 7 to the Condensed Consolidated Financial Statements for a description of the above-referenced Property Segment assets.
Revenues
For the three months ended September 30, 2026, revenues of our Property Segment increased $4.3 million to $68.5 million, compared to $64.2 million for the three months ended June 30, 2026, primarily due to Fundamental's acquisition of additional net lease properties.
Costs and Expenses
For the three months ended September 30, 2026, costs and expenses of our Property Segment increased $4.6 million to $77.9 million, compared to $73.3 million for the three months ended June 30, 2026. This was primarily due to increases in interest expense of $3.5 million and depreciation and amortization of $1.6 million, principally related to properties acquired by Fundamental.
Other Income
For the three months ended September 30, 2026, other income of our Property Segment increased $26.2 million to $38.4 million compared to $12.2 million for the three months ended June 30, 2026. This was primarily due to (i) an $18.1 million increase in income attributable to investments of the Woodstar Fund, primarily related to unrealized fair value changes, and (ii) a $6.4 million increased gain on interest rate derivatives which primarily hedge the timing of securitizations on Fundamental collateral while on a warehouse line.
Investing and Servicing Segment
Revenues
For the three months ended September 30, 2026, revenues of our Investing and Servicing Segment increased $13.7 million to $66.4 million, compared to $52.7 million for the three months ended June 30, 2026. This was primarily due to a $16.4 million increase in servicing fees principally related to default interest, partially offset by a $2.8 million decrease in interest income on lower average conduit loan balances.
Costs and Expenses
For the three months ended September 30, 2026, costs and expenses of our Investing and Servicing Segment decreased $6.5 million to $30.4 million, compared to $36.9 million for the three months ended June 30, 2026. This was primarily due to decreases of (i) $4.9 million in general and administrative expenses, principally related to lower loan securitization activity, and (ii) $1.4 million in interest expense, primarily on conduit loan financing.
Other Income (Loss)
For the three months ended September 30, 2026, other income of our Investing and Servicing Segment decreased $17.2 million to a loss of $1.8 million, compared to income of $15.4 million for the three months ended June 30, 2026. This was primarily due to (i) a $12.9 million unfavorable change in fair value of conduit loans, (ii) the nonrecurrence of a $2.3 million gain on sale of a foreclosed property in the second quarter of 2026 and (iii) a $1.9 million greater decrease in fair value of CMBS investments.
Corporate and Other Items
Corporate Costs and Expenses
For the three months ended September 30, 2026, corporate expenses increased $5.3 million to $147.6 million, compared to $142.3 million for the three months ended June 30, 2026. This was primarily due to a $5.9 million increase in interest expense, reflecting higher interest rates on newly issued unsecured senior notes and higher average secured term loan borrowings outstanding.
Corporate Other Loss
For the three months ended September 30, 2026, corporate other loss increased $54.0 million to $88.2 million, compared to $34.2 million for the three months ended June 30, 2026. This was primarily due to an increased loss on our fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
Securitization VIE Eliminations
Securitization VIE eliminations primarily reclassify interest income and servicing fee revenues to other income (loss) for the CMBS and RMBS VIEs that we consolidate as primary beneficiary. Such eliminations have no overall effect on net income (loss) attributable to Starwood Property Trust. The reclassified revenues, along with applicable changes in fair value of investment securities and servicing rights, comprise the other income (loss) caption "Change in net assets related to consolidated VIEs," which represents our beneficial interest in those consolidated VIEs. The magnitude of the securitization VIE eliminations is merely a function of the number of CMBS and RMBS trusts consolidated in any given period, and as such, is not a meaningful indicator of operating results. The eliminations primarily relate to CMBS trusts for which the Investing and Servicing Segment is deemed the primary beneficiary and, to a much lesser extent, some CMBS and RMBS trusts for which the Commercial and Residential Lending Segment is deemed the primary beneficiary.
Income Tax Benefit (Provision)
Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in taxable REIT subsidiaries ("TRSs"). For the three months ended September 30, 2026, our income tax provision decreased $9.3 million to a benefit of $3.1 million compared to a provision of $6.2 million for the three months ended June 30, 2026. This was primarily due to tax losses of our TRSs in the third quarter of 2026 compared to taxable income of our TRSs in the second quarter of 2026.
Net Income Attributable to Non-controlling Interests
During the three months ended September 30, 2026, net income attributable to non-controlling interests increased $0.1 million to $8.5 million, compared to $8.4 million during the three months ended June 30, 2026. This was primarily due to non-controlling interests in higher income of the Woodstar Fund in the third quarter of 2026, mostly offset by an unfavorable change in unrealized gains (losses) of a consolidated CMBS joint venture.
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Commercial and Residential Lending Segment
Revenues
For the nine months ended September 30, 2026, revenues of our Commercial and Residential Lending Segment increased $73.8 million to $1.1 billion, compared to $1.0 billion for the nine months ended September 30, 2025. This was primarily due to increases in interest income from loans of $58.8 million and rental income from foreclosed properties of $33.6 million, partially offset by a decrease in interest income from investment securities of $17.2 million. The increase in interest income from loans reflects (i) a $63.6 million increase from commercial loans, reflecting higher average balances, partially offset by lower average index rates and spreads and additional loans placed on nonaccrual, and (ii) a $4.8 million decrease from residential loans principally due to lower average balances partially offset by the transfer of $229.8 million of residential loans to loans held-for-investment upon our redemption of a consolidated RMBS trust in late June 2026. The decrease in interest income from investment securities was primarily due to lower average commercial and residential investment balances due to repayments and the RMBS trust redemption.
Costs and Expenses
For the nine months ended September 30, 2026, costs and expenses of our Commercial and Residential Lending Segment increased $354.1 million to $956.5 million, compared to $602.4 million for the nine months ended September 30, 2025. This was primarily due to increases of $362.5 million in credit loss provision and $34.5 million in rental costs and expenses, partially offset by a $44.9 million decrease in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio. The increase in the credit loss provision is the result of increased risk of repayment shortfalls associated with higher projected interest rates. Because our loan portfolio is predominantly floating-rate, higher rates create an increased debt service burden for our borrowers. Higher rates also contribute to higher capitalization rates and lower property values, placing pressure on borrowers' ability to refinance or sell the underlying properties. The decrease in interest expense was primarily due to lower average index rates and spreads, partially offset by higher average borrowings outstanding.
Net Interest Income (amounts in thousands)
For the Nine Months Ended September 30,
2026 2025 Change
Interest income from loans $ 978,607 $ 919,788 $ 58,819
Interest income from investment securities 46,390 63,629 (17,239)
Interest expense (482,743) (527,684) 44,941
Net interest income $ 542,254 $ 455,733 $ 86,521
For the nine months ended September 30, 2026, net interest income of our Commercial and Residential Lending Segment increased $86.5 million to $542.3 million, compared to $455.7 million for the nine months ended September 30, 2025. This reflects the net increase in interest income and the decrease in interest expense on our secured financing facilities, both as discussed in the sections above.
During the nine months ended September 30, 2026 and 2025, the weighted average unlevered yields on the Commercial and Residential Lending Segment's loans and investment securities, excluding retained RMBS and loans for which interest income is not recognized, were as follows:
For the Nine Months Ended September 30,
2026 2025
Commercial 7.4 % 8.3 %
Residential 4.9 % 5.0 %
Overall 7.1 % 7.8 %
The weighted average unlevered yield on our commercial loans decreased primarily due to lower average index rates and spreads. The unlevered yield on our residential loans declined slightly primarily due to an increase in the fair value of those loans.
During the nine months ended September 30, 2026 and 2025, the Commercial and Residential Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 5.6% and 6.5%, respectively. The decrease in borrowing rates primarily reflects lower average index rates and spreads. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 5.3% and 5.9% during the nine months ended September 30, 2026 and 2025, respectively.
Other Income (Loss)
For the nine months ended September 30, 2026, other income of our Commercial and Residential Lending Segment decreased $184.4 million to a loss of $95.6 million, compared to income of $88.8 million for the nine months ended September 30, 2025. This was primarily due to (i) a $246.6 million unfavorable change in fair value of residential loans, primarily reflecting higher interest rates and, to a lesser extent, wider credit spreads in the nine months of 2026, (ii) a $118.2 million unfavorable change in foreign currency gain (loss), (iii) a $44.0 million unfavorable change in gain (loss) on sales of foreclosed properties and other assets, (iv) $32.2 million of impairments recognized in the nine months of 2026 on two multifamily properties previously acquired through foreclosure, (v) the nonrecurrence of a $20.8 million gain on extinguishment of debt in the nine months of 2025 and (vi) a $6.7 million unfavorable change in fair value of RMBS investments, all partially offset by (vii) a $290.3 million favorable change in gain (loss) on derivatives. The favorable change in gain (loss) on derivatives during the nine months ended September 30, 2026 reflects (i) a $181.0 million favorable change in gain (loss) on interest rate swaps principally related to residential loans and (ii) a $109.3 million decreased loss on foreign currency hedges. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the decreased loss on foreign currency hedges reflect the strengthening of the U.S. dollar against the GBP and EUR, partially offset by a weakening against the AUD, during the nine months of 2026, compared to a weakening of the U.S. dollar against each of those currencies in the nine months of 2025.
Infrastructure Lending Segment
Revenues
For the nine months ended September 30, 2026, revenues of our Infrastructure Lending Segment decreased $3.7 million to $202.8 million, compared to $206.5 million for the nine months ended September 30, 2025. This was primarily due to (i) an $8.0 million decrease in interest income from loans, reflecting lower average index rates and spreads and lower prepayment related income, partially offset by higher average loan balances and unused commitment fees, (ii) a $2.5 million increase in interest income from investment securities, primarily reflecting a new investment in late June 2026, and (iii) a $1.8 million increase in interest income from cash balances.
Costs and Expenses
For the nine months ended September 30, 2026, costs and expenses of our Infrastructure Lending Segment decreased $7.7 million to $131.8 million, compared to $139.5 million for the nine months ended September 30, 2025. This was primarily due to (i) a $5.1 million decrease in credit loss provision to a reversal of $0.8 million in the nine months of 2026 compared to a provision of $4.3 million in the nine months of 2025, reflecting lower net fundings, (ii) a $1.5 million decrease in interest expense, reflecting lower average index rates and spreads, partially offset by higher average borrowings outstanding, and (iii) a $1.1 million net decrease in general, administrative and other expenses.
Net Interest Income (amounts in thousands)
For the Nine Months Ended September 30,
2026 2025 Change
Interest income from loans $ 195,083 $ 203,129 $ (8,046)
Interest income from investment securities 2,955 452 2,503
Interest expense (114,131) (115,662) 1,531
Net interest income $ 83,907 $ 87,919 $ (4,012)
For the nine months ended September 30, 2026, net interest income of our Infrastructure Lending Segment decreased $4.0 million to $83.9 million, compared to $87.9 million for the nine months ended September 30, 2025. This reflects the net
decrease in interest income from loans and investment securities, partially offset by the decrease in interest expense on the secured financing facilities, as discussed in the sections above.
During the nine months ended September 30, 2026 and 2025, the weighted average unlevered yields on the Infrastructure Lending Segment's loans and investment securities, excluding those for which interest income is not recognized, were 8.7% and 9.7%, respectively, reflecting lower average index rates and spreads in the nine months of 2026.
During the nine months ended September 30, 2026 and 2025, the Infrastructure Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.2% and 6.9%, respectively, reflecting lower average index rates and spreads in the nine months of 2026.
Other Income
For the nine months ended September 30, 2026, other income of our Infrastructure Lending Segment increased $9.0 million to $9.1 million, compared to $0.1 million for the nine months ended September 30, 2025. This was primarily due to (i) a $4.9 million increase in earnings from unconsolidated entities and (ii) a $3.9 million favorable change in gain (loss) on derivatives, representing primarily interest rate swaps on variable rate borrowings which finance fixed rate investments.
Property Segment
Change in Results by Portfolio (amounts in thousands)
$ Change from prior period
Revenues
Depreciation and amortization
Other costs and
expenses
Gain (loss) on derivative
financial instruments 		Other income (loss) Income (loss) before
income taxes
Fundamental
$ 113,070 $ 54,945 $ 69,850 $ 33,445 $ 734 $ 22,454
Medical Office Portfolio 1,590 103 (3,748) 59 (304) 4,990
Woodstar Fund 86 - (34) - 31,105 31,225
D.C. Multifamily Conversion
- - - - 1,278 1,278
Other/Corporate (22) - (305) - (30) 253
Total $ 114,724 $ 55,048 $ 65,763 $ 33,504 $ 32,783 $ 60,200
Revenues
For the nine months ended September 30, 2026, revenues of our Property Segment increased $114.7 million to $193.9 million, compared to $79.2 million for the nine months ended September 30, 2025. This was primarily due to our acquisition of Fundamental in July 2025, which provided $113.1 million of incremental net lease rental income during the nine months of 2026 compared to the partial period following its acquisition in 2025.
Costs and Expenses
For the nine months ended September 30, 2026, costs and expenses of our Property Segment increased $120.8 million to $223.4 million, compared to $102.6 million for the nine months ended September 30, 2025. This was primarily due to the acquisition of Fundamental in July 2025, which introduced (i) higher interest expense, general and administrative expenses and costs of rental operations totaling $69.8 million and (ii) higher asset depreciation and amortization of $54.9 million, during the nine months of 2026 compared to the partial period following its acquisition in 2025, the effect of which was partially offset by (iii) a $4.8 million decrease in interest expense on variable rate borrowings of the Medical Office Portfolio, primarily due to repayment of its $39.5 million mezzanine debt in February 2026 and lower average index rates.
Other Income (Loss)
For the nine months ended September 30, 2026, other income of our Property Segment increased $66.3 million to income of $65.3 million, compared to a loss of $1.0 million for the nine months ended September 30, 2025. This was primarily due to (i) a $33.5 million favorable change in gain (loss) on derivatives which primarily hedge the timing of securitizations on Fundamental collateral while on a warehouse line and (ii) a $31.1 million increase in income attributable to investments of the Woodstar Fund, primarily related to unrealized fair value changes.
Investing and Servicing Segment
Revenues
For the nine months ended September 30, 2026, revenues of our Investing and Servicing Segment increased $26.4 million to $199.9 million, compared to $173.5 million for the nine months ended September 30, 2025. This was primarily due to (i) a $40.2 million increase in servicing fees principally related to default interest, partially offset by (ii) an $8.6 million decrease in interest income from CMBS investments and conduit loans primarily due to lower interest recoveries on CMBS investments and lower average loan balances held during the nine months of 2026 and (iii) a $5.1 million decrease in rental income on fewer properties held.
Costs and Expenses
For the nine months ended September 30, 2026, costs and expenses of our Investing and Servicing Segment decreased $7.3 million to $100.0 million, compared to $107.3 million for the nine months ended September 30, 2025. This was primarily due to decreases of (i) $4.4 million in general and administrative expenses, principally related to lower loan securitization activity, and (ii) $3.8 million in rental costs and expenses.
Other Income
For the nine months ended September 30, 2026, other income of our Investing and Servicing Segment decreased $34.9 million to $15.6 million, compared to $50.5 million for the nine months ended September 30, 2025. This was primarily due to (i) a $28.4 million lesser increase in fair value of conduit loans and (ii) a $7.6 million decrease in earnings from unconsolidated entities, partially offset by (iii) a $3.1 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.
Corporate and Other Items
Corporate Costs and Expenses
For the nine months ended September 30, 2026, corporate expenses increased $81.0 million to $433.8 million, compared to $352.8 million for the nine months ended September 30, 2025. This was primarily due to (i) an $88.4 million increase in interest expense reflecting higher average balances of unsecured senior notes and secured term loans outstanding, partially offset by lower spreads and index rates on the secured term loans, and (ii) a $6.9 million decrease in management fees, principally reflecting lower incentive fees and stock compensation expense.
Corporate Other Income (Loss)
For the nine months ended September 30, 2026, corporate other income decreased $185.6 million to a loss of $143.9 million, compared to income of $41.7 million for the nine months ended September 30, 2025. This was primarily due to an unfavorable change in gain (loss) on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
Securitization VIE Eliminations
Refer to the preceding comparison of the three months ended September 30, 2026 to the three months ended June 30, 2026 for a discussion of the effect of securitization VIE eliminations.
Income Tax Benefit (Provision)
Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in TRSs. For the nine months ended September 30, 2026, our income tax provision decreased $18.6 million to a benefit of $0.8 million, compared to a provision of $17.8 million for the nine months ended September 30, 2025. This was primarily due to tax losses of our TRSs in the nine months of 2026 compared to taxable income of our TRSs in the nine months of 2025.
Net Income Attributable to Non-controlling Interests
For the nine months ended September 30, 2026, net income attributable to non-controlling interests increased $6.4 million to $22.5 million, compared to $16.1 million for the nine months ended September 30, 2025. This was primarily due to non-controlling interests in higher income of the Woodstar Fund in the nine months of 2026.
Non-GAAP Financial Measures
Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses are non-GAAP financial measures. We calculate Distributable Earnings as GAAP net income (loss) excluding the following: (i) non-cash equity compensation expense; (ii) the incentive fee due under our management agreement; (iii) acquisition and investment pursuit costs associated with successful acquisitions; (iv) depreciation and amortization of real estate and associated intangibles; (v) unrealized gains (losses), net of realized gains (losses), as described further below; (vi) other non-cash items; and (vii) to the extent deducted from net income (loss), distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein (i.e. the Woodstar II Class A units), with each of the above adjusted for any related non-controlling interest. Distributable Earnings may be adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by our Manager and approved by a majority of our independent directors.
As noted in (v) above, we exclude unrealized gains and losses from our calculation of Distributable Earnings and include realized gains and losses. The nature of these adjustments is described more fully in the footnotes to our reconciliation tables. In order to present each of these items within our Distributable Earnings reconciliation tables in a manner which can be agreed more easily to our GAAP financial statements, we reverse the entirety of those items within our GAAP financial statements which contain unrealized and realized components (i.e. those assets and liabilities carried at fair value, including loans or securities for which the fair value option has been elected, investment company assets and liabilities, derivatives, foreign currency conversions, and accumulated depreciation related to sold properties). The realized portion of these items is then separately included in the reconciliation table, along with a description as to how the amount was determined.
The CECL reserve and any property impairment losses have been excluded from Distributable Earnings consistent with other unrealized losses pursuant to our existing policy for reporting Distributable Earnings. We expect to only recognize such potential credit or property impairment losses in Distributable Earnings if and when such amounts are deemed nonrecoverable upon a realization event. This is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold. Non-recoverability may also be determined if, in our determination, it is nearly certain the carrying amounts will not be collected or realized upon sale. The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received, or expected to be received, and the Distributable Earnings basis of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the asset. The timing of any such loss realization in our Distributable Earnings may differ materially from the timing of the corresponding CECL reserves, charge-offs or impairments in our consolidated financial statements prepared in accordance with GAAP.
We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flows from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring our dividends. We also use Distributable Earnings (previously defined as "Core Earnings") to compute the incentive fee due under our management agreement.
We believe it is also useful to present another non-GAAP financial measure, Distributable Earnings prior to realized commercial lending gains and losses. This measure adjusts Distributable Earnings to exclude realized gains and losses resulting from the disposition or resolution of commercial loans that were on nonaccrual or properties acquired through foreclosure held within our Commercial and Residential Lending Segment. We believe this supplemental measure helps investors assess the earnings capacity of our existing investment portfolio and inform their assessment of future earnings and potential dividends by separately identifying the impact of realized commercial lending gains and losses arising from loan resolutions and dispositions of foreclosed real estate. Because these gains and losses remain an important component of our overall economic performance and dividend coverage, they are included in Distributable Earnings. Management and our Board of Directors consider both measures when evaluating our performance and determining our dividend.
Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses do not represent net income (loss) or cash generated from operating activities and should not be considered as alternatives to GAAP net income (loss), or an indication of our GAAP cash flows from operations, a measure of our liquidity, taxable income, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses may not be comparable to similar measures reported by other companies.
As discussed in Note 2 to the Condensed Consolidated Financial Statements, consolidation of securitization variable interest entities ("VIEs") results in the elimination of certain key financial statement line items, particularly within revenues and other income, including unrealized changes in fair value of loans and investment securities. These line items are essential to understanding the true financial performance of our business segments and the Company as a whole. For this reason, as referenced in Note 2 to our Condensed Consolidated Financial Statements, we present business segment data in Note 23 without consolidation of these VIEs. This is how we manage our business and is the basis for all data reviewed with our board of directors, investors and analysts. This presentation also allows for a more transparent reconciliation of the unrealized gain (loss) adjustments below to the segment data presented in Note 23.
The weighted average diluted share count applied to Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses for purposes of determining Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses per share ("EPS") is computed using the GAAP diluted share count, adjusted for the following:
(i)Unvested stock awards - Currently, unvested stock awards are excluded from the denominator of GAAP EPS. The related compensation expense is also excluded from Distributable Earnings. In order to effectuate dilution from these awards in the Distributable Earnings computation, we adjust the GAAP diluted share count to include these shares.
(ii)Convertible Notes - Conversion of our Convertible Notes is an event that is contingent upon numerous factors, none of which are in our control, and is an event that may or may not occur. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, we adjust the GAAP diluted share count to exclude the potential shares issuable upon conversion until a conversion occurs.
(iii)Subsidiary equity - The intent of a February 2018 amendment to our management agreement (the "Amendment") is to treat subsidiary equity in the same manner as if parent equity had been issued. The Class A Units issued in connection with the acquisition of assets in our Woodstar II Portfolio are currently excluded from our GAAP diluted share count, with the subsidiary equity represented as non-controlling interests in consolidated subsidiaries on our GAAP balance sheet. Consistent with the Amendment, we adjust GAAP diluted share count to include these subsidiary units.
The following table presents our diluted weighted average shares used in our GAAP EPS calculations reconciled to our diluted weighted average shares used in our Distributable EPS calculations (amounts in thousands):
For the Three Months Ended
For the Nine Months Ended
September 30, 2026 June 30, 2026
September 30, 2026
September 30, 2025
Diluted weighted average shares - GAAP EPS 363,866 366,731 365,566 344,299
Add: Unvested stock awards 5,594 5,565 5,740 5,052
Add: Woodstar II Class A Units 9,643 9,643 9,643 9,664
Diluted weighted average shares - Distributable EPS 379,103 381,939 380,949 359,015
As noted above, the definition of Distributable Earnings provides flexibility for management to make adjustments, subject to the approval of a majority of our independent directors, when appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. No adjustments to the definition of Distributable Earnings became effective during the nine months ended September 30, 2026, however, our presentation of Distributable Earnings prior to realized commercial lending gains and losses commenced this quarter.
The following tables summarize our quarterly Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses per weighted average diluted share for the nine months ended September 30, 2026 and 2025:
Distributable Earnings For the Three-Month Periods Ended
March 31, June 30, September 30,
2026
$ 0.39 $ 0.40 $ 0.31
2025
0.45 0.43 0.40
Distributable Earnings Prior to Realized Commercial Lending Gains and Losses
For the Three-Month Periods Ended
March 31, June 30, September 30,
2026
$ 0.40 $ 0.40 $ 0.41
2025
0.45 0.56 0.39
Distributable Earnings per weighted average diluted share for the nine months ended September 30, 2026 and 2025 and Distributable Earnings prior to realized commercial lending gains and losses per weighted average diluted share for the nine months ended September 30, 2025 do not equal the sum of the individual quarters due to rounding and other computational factors.
The following table presents our summarized results of operations and reconciliation to Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses for the three months ended September 30, 2026, by business segment (amounts in thousands, except per share data). Refer to the footnotes following the similar reconciliation table for the nine months ended September 30, 2025.
Commercial
and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Total
Revenues $ 377,533 $ 70,512 $ 68,457 $ 66,410 $ 888 $ 583,800
Costs and expenses (539,855) (44,231) (77,880) (30,401) (147,569) (839,936)
Other (loss) income (81,657) 5,118 38,442 (1,820) (88,181) (128,098)
(Loss) income before income taxes (243,979) 31,399 29,019 34,189 (234,862) (384,234)
Income tax benefit (provision) 7,419 (267) (19) (4,064) - 3,069
(Income) loss attributable to non-controlling interests (3) - (9,012) 472 - (8,543)
Net (loss) income attributable to Starwood Property Trust, Inc. (236,563) 31,132 19,988 30,597 (234,862) (389,708)
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,628 - - 4,628
Non-controlling interests attributable to unrealized gains/losses - - 714 (929) - (215)
Non-cash equity compensation expense 2,613 797 (269) 1,467 6,472 11,080
Depreciation and amortization 4,580 - 31,237 1,083 - 36,900
Straight-line rent adjustment - - (1,864) 57 - (1,807)
Interest income adjustment for loans and securities 4,558 - - 13,207 - 17,765
Consolidated income tax (benefit) provision associated with fair value adjustments (7,419) 267 19 4,064 - (3,069)
Other non-cash items 3 (1) (82) (406) - (486)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans 121,362 - - 276 - 121,638
Credit loss provision (reversal), net 336,824 (212) - - - 336,612
Securities (879) - - 3,666 - 2,787
Woodstar Fund investments - - (23,060) - - (23,060)
Derivatives (84,663) (3,470) (14,792) (815) 87,314 (16,426)
Foreign currency 480 - (11) - - 469
Earnings from unconsolidated entities (786) (1,648) - (484) - (2,918)
Sales of properties 11,563 - (145) - - 11,418
Unrealized impairment of properties 32,163 - - - - 32,163
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(715) - - 1,164 - 449
Securities (3)
(437) - - (8,415) - (8,852)
Woodstar Fund investments (4)
- - 19,591 - - 19,591
Derivatives (5)
(6,720) (5) 10,072 519 (7,550) (3,684)
Foreign currency (6)
8,249 - 11 - - 8,260
Earnings from unconsolidated entities (7)
786 476 - 490 - 1,752
Sales of properties (8)
(38,397) - (120) - - (38,517)
Distributable Earnings (Loss) $ 146,602 $ 27,336 $ 45,917 $ 45,541 $ (148,626) $ 116,770
Realized losses on foreclosed property sales (9)
38,397 - - - - 38,397
Distributable Earnings (Loss) prior to realized commercial lending gains and losses $ 184,999 $ 27,336 $ 45,917 $ 45,541 $ (148,626) $ 155,167
Distributable Earnings (Loss) per weighted average diluted share $ 0.39 $ 0.07 $ 0.12 $ 0.12 $ (0.39) $ 0.31
Distributable Earnings (Loss) prior to realized commercial lending gains and losses per weighted average diluted share $ 0.49 $ 0.07 $ 0.12 $ 0.12 $ (0.39) $ 0.41
The following table presents our summarized results of operations and reconciliation to Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses for the three months ended June 30, 2026, by business segment (amounts in thousands, except per share data). Refer to the footnotes following the similar reconciliation table for the nine months ended September 30, 2025.
Commercial
and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Total
Revenues $ 364,214 $ 68,946 $ 64,189 $ 52,662 $ 822 $ 550,833
Costs and expenses (226,739) (45,784) (73,318) (36,859) (142,322) (525,022)
Other (loss) income (997) 3,027 12,231 15,397 (34,240) (4,582)
Income (loss) before income taxes 136,478 26,189 3,102 31,200 (175,740) 21,229
Income tax (provision) benefit (2,536) (95) 8 (3,601) - (6,224)
Income attributable to non-controlling interests (4) - (5,325) (3,119) - (8,448)
Net income (loss) attributable to Starwood Property Trust, Inc. 133,938 26,094 (2,215) 24,480 (175,740) 6,557
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,629 - - 4,629
Non-controlling interests attributable to unrealized gains/losses - - (2,724) (2,226) - (4,950)
Non-cash equity compensation expense 2,585 788 2,014 1,449 6,477 13,313
Depreciation and amortization 4,817 - 29,632 1,121 - 35,570
Straight-line rent adjustment - - (1,697) 57 - (1,640)
Interest income adjustment for loans and securities 4,675 - - 12,686 - 17,361
Consolidated income tax provision (benefit) associated with fair value adjustments 2,536 95 (8) 3,601 - 6,224
Other non-cash items 5 447 (82) (407) - (37)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans 12,711 - - (12,650) - 61
Credit loss provision, net 29,816 348 - - - 30,164
Securities 1,587 - - 1,717 - 3,304
Woodstar Fund investments - - (4,929) - - (4,929)
Derivatives (21,529) (350) (8,354) (983) 34,240 3,024
Foreign currency 5,719 - (13) - - 5,706
Earnings from unconsolidated entities - (2,677) - (193) - (2,870)
Sales of properties (32) - (27) (2,264) - (2,323)
Recognition of Distributable realized gains /
(losses) on:
Loans (2)
(454) - - 12,636 - 12,182
Securities (3)
(51) - - (682) - (733)
Woodstar Fund investments (4)
- - 18,208 - - 18,208
Derivatives (5)
8,570 248 (235) 1,650 (2,907) 7,326
Foreign currency (6)
803 - 13 - - 816
Earnings from unconsolidated entities (7)
- 2,146 - 469 - 2,615
Sales of properties (8)
32 - (35) 1,928 - 1,925
Distributable Earnings (Loss) $ 185,728 $ 27,139 $ 34,177 $ 42,389 $ (137,930) $ 151,503
Realized gain on foreclosed property sales (9)
(32) - - - - (32)
Distributable Earnings (Loss) prior to realized commercial lending gains and losses $ 185,696 $ 27,139 $ 34,177 $ 42,389 $ (137,930) $ 151,471
Distributable Earnings (Loss) per weighted average diluted share $ 0.49 $ 0.07 $ 0.09 $ 0.11 $ (0.36) $ 0.40
Distributable Earnings (Loss) prior to realized commercial lending gains and losses per weighted average diluted share $ 0.49 $ 0.07 $ 0.09 $ 0.11 $ (0.36) $ 0.40
Three Months Ended September 30, 2026 Compared to the Three Months Ended June 30, 2026
Commercial and Residential Lending Segment
The Commercial and Residential Lending Segment's Distributable Earnings decreased by $39.1 million, from $185.7 million during the second quarter of 2026 to $146.6 million in the third quarter of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $382.2 million, costs and expenses were $195.9 million, other loss was $39.7 million and there was no income tax provision or benefit.
Revenues, consisting principally of interest income on loans, increased by $13.2 million in the third quarter of 2026, primarily due to an increase in interest income from loans of $14.0 million. The increase in interest income from loans was comprised of (i) an $11.5 million increase from commercial loans, primarily reflecting higher average loan balances and prepayment related income, and (ii) a $2.5 million increase from residential loans, primarily reflecting the transfer of $229.8 million of residential loans to loans held-for-investment upon our redemption of a consolidated RMBS trust in late June 2026. Interest income from investment securities was relatively unchanged between quarters, reflecting a $1.8 million increase from a new commercial lending investment offset by a $1.8 million decrease from RMBS investments, primarily due to the RMBS trust redemption.
Costs and expenses increased by $6.3 million in the third quarter of 2026, primarily due to an increase in interest expense reflecting higher average borrowings outstanding.
Other income decreased by $46.0 million to a loss in the third quarter of 2026, primarily due to (i) $38.4 million of realized losses on sales of two previously foreclosed multifamily properties in the third quarter of 2026, and (ii) a $7.8 million unfavorable change in realized gains (losses) on derivative financial instruments and related foreign currency gains.
Infrastructure Lending Segment
The Infrastructure Lending Segment's Distributable Earnings increased by $0.2 million, from $27.1 million during the second quarter of 2026 to $27.3 million in the third quarter of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $70.5 million, costs and expenses were $43.7 million and other income was $0.5 million.
Revenues increased by $1.6 million in the third quarter of 2026, primarily due to a $1.6 million increase in interest income from investment securities, primarily reflecting a new investment in late June 2026.
Costs and expenses decreased by $0.5 million in the third quarter of 2026, primarily due to a decrease in general, administrative and other expenses.
Other income decreased by $1.9 million in the third quarter of 2026, primarily due to a $1.7 million decrease in earnings from unconsolidated entities.
Property Segment
Distributable Earnings by Portfolio (amounts in thousands)
For the Three Months Ended
September 30, 2026 June 30, 2026 Change
Fundamental $ 27,251 $ 17,885 $ 9,366
Woodstar Fund, net of non-controlling interests 15,644 14,639 1,005
Medical Office Portfolio 3,434 3,687 (253)
D.C. Multifamily Conversion
434 (1,153) 1,587
Other/Corporate (846) (881) 35
Distributable Earnings $ 45,917 $ 34,177 $ 11,740
The Property Segment's Distributable Earnings increased by $11.7 million, from $34.2 million during the second quarter of 2026 to $45.9 million in the third quarter of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $66.9 million, costs and expenses were $47.5 million, other income was $30.2 million, there was no income tax provision and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $3.7 million.
Revenues increased by $4.4 million in the third quarter of 2026, primarily due to Fundamental's acquisition of additional net lease properties.
Costs and expenses increased by $5.5 million in the third quarter of 2026, primarily due to a $3.5 million increase in interest expense, principally related to properties acquired by Fundamental, and a $1.4 million increase in general and administrative expenses, principally related to severance costs.
Other income increased by $13.1 million in the third quarter of 2026, primarily due a $10.3 million realized gain on derivatives in the third quarter of 2026 which hedge the timing of securitizations on Fundamental collateral while on a warehouse line.
Income attributable to non-controlling interests in the Woodstar Fund increased by $0.3 million in the third quarter of 2026.
Investing and Servicing Segment
The Investing and Servicing Segment's Distributable Earnings increased by $3.1 million, from $42.4 million during the second quarter of 2026 to $45.5 million in the third quarter of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $79.7 million, costs and expenses were $28.3 million, other loss was $5.4 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $0.5 million.
Revenues increased by $14.3 million in the third quarter of 2026, primarily due to a $16.4 million increase in servicing fees principally related to default interest, partially offset by a $2.8 million decrease in interest income on lower average conduit loan balances.
Costs and expenses decreased by $6.4 million in the third quarter of 2026, primarily due to decreases of (i) $4.9 million in general and administrative expenses, principally related to lower loan securitization activity, and (ii) $1.4 million in interest expense, primarily on conduit loan financing.
Other income includes profit realized upon securitization of loans by our conduit business, gains on sales of CMBS and operating properties, gains and losses on derivatives that were either effectively terminated or novated, and earnings from unconsolidated entities. These items are typically offset by a decrease in the fair value of our domestic servicing rights intangible which reflects the expected amortization of this deteriorating asset, net of increases in fair value due to the attainment of new servicing contracts. Derivatives include instruments which hedge interest rate risk and credit risk on our conduit loans and CMBS investments. For GAAP purposes, the loans, CMBS and derivatives are accounted for at fair value, with all changes in fair value (realized or unrealized) recognized in earnings. The adjustments to Distributable Earnings outlined above are also applied to the GAAP earnings of our unconsolidated entities. Other income decreased by $22.4 million to a loss in the third quarter of 2026, primarily due to (i) an $11.5 million decrease in realized gains on sales of conduit loans, (ii) a $6.3 million increase in recognized credit losses on CMBS investments and (iii) a $3.3 million decrease in realized gains on sales of CMBS investments and a foreclosed property.
Income attributable to non-controlling interests decreased $4.8 million in the third quarter of 2026, primarily due to lower distributable earnings of a consolidated CMBS joint venture.
Corporate
Corporate loss increased by $10.7 million, from $137.9 million during the second quarter of 2026 to $148.6 million in the third quarter of 2026, primarily due to (i) a $5.9 million increase in interest expense, reflecting higher interest rates on newly issued unsecured senior notes and higher average secured term loan borrowings outstanding, and (ii) a $4.6 million increased realized loss on our fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
The following table presents our summarized results of operations and reconciliation to Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses for the nine months ended September 30, 2026, by business segment (amounts in thousands, except per share data):
Commercial
and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Total
Revenues $ 1,086,328 $ 202,753 $ 193,946 $ 199,909 $ 2,380 $ 1,685,316
Costs and expenses (956,457) (131,788) (223,427) (99,962) (433,773) (1,845,407)
Other (loss) income (95,600) 9,097 65,294 15,626 (143,854) (149,437)
Income (loss) before income taxes 34,271 80,062 35,813 115,573 (575,247) (309,528)
Income tax benefit (provision) 16,611 (412) 6 (15,415) - 790
Income attributable to non-controlling interests (10) - (21,164) (1,361) - (22,535)
Net income (loss) attributable to Starwood Property Trust, Inc. 50,872 79,650 14,655 98,797 (575,247) (331,273)
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 13,886 - - 13,886
Non-controlling interests attributable to unrealized gains/losses - - (3,317) (7,900) - (11,217)
Non-cash equity compensation expense 8,282 2,337 3,740 4,341 19,687 38,387
Management incentive fee - - - - 5,567 5,567
Depreciation and amortization 13,670 - 89,443 3,396 - 106,509
Straight-line rent adjustment - - (5,210) 228 - (4,982)
Interest income adjustment for loans and securities 14,307 - - 31,269 - 45,576
Consolidated income tax (benefit) provision associated with fair value adjustments (16,611) 412 (6) 15,415 - (790)
Other non-cash items 10 446 (246) (1,219) - (1,009)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans 155,053 - - (20,686) - 134,367
Credit loss provision (reversal), net 367,226 (827) - - - 366,399
Securities 257 - - 13,304 - 13,561
Woodstar Fund investments - - (40,453) - - (40,453)
Derivatives (122,555) (3,909) (25,422) (2,040) 142,987 (10,939)
Foreign currency 12,314 - (49) - - 12,265
Earnings from unconsolidated entities (786) (5,168) - (1,089) - (7,043)
Sales of properties 11,207 - (641) (2,264) - 8,302
Unrealized impairment of properties 32,163 - - - - 32,163
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(1,537) - - 22,358 - 20,821
Securities (3)
(574) - - (14,351) - (14,925)
Woodstar Fund investments (4)
- - 56,620 - - 56,620
Derivatives (5)
14,485 274 6,748 2,445 (13,274) 10,678
Foreign currency (6)
9,191 - 49 - - 9,240
Earnings from unconsolidated entities (7)
786 3,133 - 1,395 - 5,314
Sales of properties (8)
(43,150) - (255) 1,928 - (41,477)
Distributable Earnings (Loss) $ 504,610 $ 76,348 $ 109,542 $ 145,327 $ (420,280) $ 415,547
Realized losses on foreclosed property sales (9)
43,150 - - - - 43,150
Distributable Earnings (Loss) prior to realized commercial lending gains and losses $ 547,760 $ 76,348 $ 109,542 $ 145,327 $ (420,280) $ 458,697
Distributable Earnings (Loss) per weighted average diluted share $ 1.32 $ 0.20 $ 0.29 $ 0.38 $ (1.10) $ 1.09
Distributable Earnings (Loss) prior to realized commercial lending gains and losses per weighted average diluted share $ 1.44 $ 0.20 $ 0.29 $ 0.38 $ (1.10) $ 1.21
The following table presents our summarized results of operations and reconciliation to Distributable Earnings and Distributable Earnings prior to realized commercial lending gains and losses for the nine months ended September 30, 2025, by business segment (amounts in thousands, except per share data):
Commercial
and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Total
Revenues $ 1,012,499 $ 206,527 $ 79,222 $ 173,548 $ 1,324 $ 1,473,120
Costs and expenses (602,429) (139,536) (102,616) (107,338) (352,840) (1,304,759)
Other income (loss) 88,780 112 (993) 50,540 41,707 180,146
Income (loss) before income taxes 498,850 67,103 (24,387) 116,750 (309,809) 348,507
Income tax (provision) benefit (2,231) 189 6 (15,744) - (17,780)
Income attributable to non-controlling interests (10) - (14,776) (1,312) - (16,098)
Net income (loss) attributable to Starwood Property Trust, Inc. 496,609 67,292 (39,157) 99,694 (309,809) 314,629
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 13,917 - - 13,917
Non-controlling interests attributable to unrealized gains/losses - - (11,080) (6,378) - (17,458)
Non-cash equity compensation expense 8,476 2,056 1,781 4,091 25,066 41,470
Management incentive fee - - - - 10,244 10,244
Depreciation and amortization 9,146 - 33,545 5,562 - 48,253
Straight-line rent adjustment - - 307 104 - 411
Interest income adjustment for loans and securities 17,843 - - 31,727 - 49,570
Consolidated income tax provision (benefit) associated with fair value adjustments 2,231 (189) (6) 15,744 - 17,780
Other non-cash items 10 - (246) (1,219) - (1,455)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (91,543) - - (49,095) - (140,638)
Credit loss provision, net 4,709 4,317 - - - 9,026
Securities (6,450) - - 14,370 - 7,920
Woodstar Fund investments - - (9,349) - - (9,349)
Derivatives 167,702 12 8,082 1,082 (41,707) 135,171
Foreign currency (105,878) (656) 197 - - (106,337)
Earnings from unconsolidated entities (2,708) (251) - (8,689) - (11,648)
Sales of properties (5,223) - 21 - - (5,202)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(1,556) - - 47,987 - 46,431
Securities (3)
(761) - - (15,082) - (15,843)
Woodstar Fund investments(4)
- - 63,272 - - 63,272
Derivatives (5)
57,668 149 290 (1,788) (21,401) 34,918
Foreign currency (6)
2,347 85 (197) - - 2,235
Earnings (loss) from unconsolidated entities (7)
2,708 (327) - 9,659 - 12,040
Sales of properties (8)
(43,343) - (25) - - (43,368)
Distributable Earnings (Loss) $ 511,987 $ 72,488 $ 61,352 $ 147,769 $ (337,607) $ 455,989
Realized losses on foreclosed property sales (9)
43,343 - - - - 43,343
Distributable Earnings (Loss) prior to realized commercial lending gains and losses $ 555,330 $ 72,488 $ 61,352 $ 147,769 $ (337,607) $ 499,332
Distributable Earnings (Loss) per weighted average diluted share $ 1.43 $ 0.20 $ 0.17 $ 0.41 $ (0.94) $ 1.27
Distributable Earnings (Loss) prior to realized commercial lending gains and losses per weighted average diluted share $ 1.55 $ 0.20 $ 0.17 $ 0.41 $ (0.94) $ 1.39
______________________________________________________________________________________________________________________
(1)The reconciling items in this section are exactly equivalent to the amounts recognized within GAAP net income (before the consolidation of VIEs), each of which can be agreed back to the respective lines within Note 23 to our Condensed Consolidated Financial Statements. They reflect both unrealized and realized (gains) and losses and, in the case of property sales, include the related gain or loss on extinguishment of debt associated with such sale, if any. For added transparency and consistency of presentation, the entire amount recognized in GAAP income is reversed in this section, and the realized components of these amounts are reflected in the next section entitled "Recognition of Distributable realized gains / (losses)."
(2)Represents the realized portion of GAAP gains (losses) on residential and commercial conduit loans carried under the fair value option that were sold during the period or expected to be sold in the near term subject to a binding agreement. The amount is calculated as the difference between (i) the net proceeds received or expected to be received in connection with a securitization or sale of loans and (ii) such loans' historical cost basis.
(3)Represents the realized portion of GAAP gains (losses) on CMBS and RMBS carried under the fair value option that are sold or impaired during the period. Upon sale, the difference between the cash proceeds received and the historical cost basis of the security is treated as a realized gain or loss for Distributable Earnings purposes. We consider a CMBS or an RMBS credit loss to be realized when such amounts are deemed nonrecoverable. Non-recoverability is generally at the time the underlying assets within the securitization are liquidated, but non-recoverability may also be determined if, in our determination, it is nearly certain that all amounts due will not be collected. The amount is calculated as the difference between the cash received and the historical cost basis of the security.
(4)Represents GAAP income from the Woodstar Fund investments excluding unrealized changes in the fair value of its underlying assets and liabilities. The amount is calculated as the difference between the Woodstar Fund's GAAP net income and its unrealized gains (losses), which represents changes in working capital and actual cash distributions received.
(5)Represents the realized portion of GAAP gains or losses on the termination or settlement of derivatives that are accounted for at fair value. Derivatives are only treated as realized for Distributable Earnings when they are terminated or settled, and cash is exchanged. The amount of cash received or paid to terminate or settle the derivative is the amount treated as realized for Distributable Earnings purposes at the time of such termination or settlement.
(6)Represents the realized portion of foreign currency gains (losses) related to assets and liabilities denominated in a foreign currency. Realization occurs when the foreign currency is converted back to USD. The amount is calculated as the difference between the foreign exchange rate at the time the asset was placed on the balance sheet and the foreign exchange rate at the time cash is received and is offset by any gains or losses on the related foreign currency derivative at settlement.
(7)Represents GAAP earnings (loss) from unconsolidated entities excluding non-cash items and unrealized changes in fair value recorded on the books and records of the unconsolidated entities. The difference between GAAP and Distributable Earnings for these entities principally relates to depreciation and unrealized changes in the fair value of mortgage loans and securities.
(8)Represents the realized gain (loss) on sales of properties held at depreciated cost. Because depreciation is a non-cash expense that is excluded from Distributable Earnings, GAAP gains upon sale of a property are higher, and GAAP losses are lower, than the respective realized amounts reflected in Distributable Earnings. The amount is calculated as net sales proceeds less undepreciated cost, adjusted for any noncontrolling interest and any realized gain or loss on extinguishment of debt.
(9)Represents, as applicable, the realized gain (loss) resulting from the disposition or resolution of commercial loans that were on nonaccrual or properties acquired through foreclosure held within our Commercial and Residential Lending Segment.
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Commercial and Residential Lending Segment
The Commercial and Residential Lending Segment's Distributable Earnings decreased by $7.4 million, from $512.0 million during the nine months of 2025 to $504.6 million in the nine months of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $1.1 billion, costs and expenses were $567.5 million, other loss was $28.7 million and there was no income tax provision or benefit.
Revenues, consisting principally of interest income on loans, increased by $70.2 million in the nine months of 2026, primarily due to increases in interest income from loans of $59.0 million and rental income from foreclosed properties of $33.5 million, partially offset by a decrease in interest income from investment securities of $20.9 million. The increase in interest income from loans reflects (i) a $63.8 million increase from commercial loans, reflecting higher average balances, partially offset by lower average index rates and spreads and additional loans placed on nonaccrual, and (ii) a $4.8 million decrease from residential loans principally due to lower average balances, partially offset by the transfer of $229.8 million of residential loans to loans held-for-investment upon our redemption of a consolidated RMBS trust in late June 2026. The decrease in interest income from investment securities was primarily due to lower average commercial and residential investment balances due to repayments and the RMBS trust redemption.
Costs and expenses decreased by $12.9 million in the nine months of 2026, primarily due to (i) a $44.9 million decrease in interest expense, partially offset by (ii) a $29.9 million increase in costs of rental operations and (iii) a $2.1 million increase in general and administrative expenses. The decrease in interest expense was primarily due to lower average index rates and spreads, partially offset by higher average borrowings outstanding.
Other income decreased by $90.5 million to a loss in the nine months of 2026, primarily due to (i) a $36.3 million decrease in net realized gains on derivative financial instruments and related foreign currency gains, (ii) a $27.4 million increased realized loss on sales of foreclosed properties and other assets, (iii) the nonrecurrence of a $20.8 million gain on extinguishment of debt in the nine months of 2025 and (iii) a $4.3 million increase in other loss.
Infrastructure Lending Segment
The Infrastructure Lending Segment's Distributable Earnings increased by $3.8 million, from $72.5 million during the nine months of 2025 to $76.3 million in the nine months of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $202.7 million, costs and expenses were $129.8 million and other income was $3.4 million.
Revenues decreased by $3.8 million in the nine months of 2026, primarily due to (i) an $8.0 million decrease in interest income from loans, reflecting lower average index rates and spreads and lower prepayment related income, partially offset by higher average loan balances and unused commitment fees, (ii) a $2.5 million increase in interest income from investment securities, primarily reflecting a new investment in late June 2026, and (iii) a $1.8 million increase in interest income from cash balances.
Costs and expenses decreased by $3.3 million in the nine months of 2026, primarily due to (i) a $1.8 million net decrease in general, administrative and other expenses and (ii) a $1.5 million decrease in interest expense, reflecting lower average index rates and spreads, partially offset by higher average borrowings outstanding.
Other income (loss) improved by $4.3 million to income in the nine months of 2026, primarily due to a $3.5 million favorable change in distributable earnings (loss) from unconsolidated entities and a $0.8 million decreased loss on extinguishment of debt.
Property Segment
Distributable Earnings by Portfolio (amounts in thousands)
For the Nine Months Ended September 30,
2026 2025 Change
Fundamental $ 57,772 $ 10,164 $ 47,608
Woodstar Fund, net of non-controlling interests 45,616 51,673 (6,057)
Medical Office Portfolio 10,054 5,272 4,782
D.C. Multifamily Conversion
(1,030) (2,308) 1,278
Other/Corporate (2,870) (3,449) 579
Distributable Earnings $ 109,542 $ 61,352 $ 48,190
The Property Segment's Distributable Earnings increased by $48.1 million, from $61.4 million during the nine months of 2025 to $109.5 million in the nine months of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $189.1 million, costs and expenses were $131.6 million, other income was $62.6 million, there was no income tax provision and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $10.6 million.
Revenues increased by $109.0 million in the nine months of 2026, primarily due to our acquisition of Fundamental in July 2025, which provided $107.7 million of incremental net lease rental income during the nine months of 2026 compared to the partial period following its acquisition in 2025.
Costs and expenses increased by $63.2 million in the nine months of 2026, primarily due to (i) the acquisition of Fundamental in July 2025, which introduced $66.8 million of incremental costs and expenses in the nine months of 2026 compared to the partial period following its acquisition in 2025, the effect of which was partially offset by (ii) a $4.9 million decrease in interest expense on variable rate borrowings of the Medical Office Portfolio, primarily due to repayment of its $39.5 million mezzanine debt in February 2026 and lower average index rates.
Other income increased by $1.0 million in the nine months of 2026, primarily due to (i) a $6.9 million increased realized gain on derivatives which hedge the timing of securitizations on Fundamental collateral while on a warehouse line and (ii) a $1.0 million decrease in other loss, partially offset by (iii) a $6.7 million decrease in distributable income from the Woodstar Fund.
Income attributable to non-controlling interests in the Woodstar Fund decreased $1.3 million in the nine months of 2026, reflecting the decrease in distributable income referred to above.
Investing and Servicing Segment
The Investing and Servicing Segment's Distributable Earnings decreased by $2.5 million from $147.8 million during the nine months of 2025 to $145.3 million in the nine months of 2026. After making adjustments for the calculation of Distributable Earnings, revenues were $231.4 million, costs and expenses were $93.4 million, other income was $16.6 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $9.3 million.
Revenues increased by $25.9 million in the nine months of 2026, primarily due to (i) a $40.2 million increase in servicing fees principally related to default interest, partially offset by (ii) a $9.1 million decrease in interest income from CMBS investments and conduit loans, primarily due to payoffs of certain CMBS investments in 2025 and lower average conduit loan balances held, and (iii) a $5.1 million decrease in rental income on fewer properties held. The treatment of CMBS interest income on a GAAP basis is complicated by our application of the ASC 810 consolidation rules. In an attempt to treat these securities similar to our other investment securities, we compute distributable interest income pursuant to an effective yield methodology. In doing so, we segregate the portfolio into various categories based on the components of the bonds' cash flows and the volatility related to each of these components. We then accrete interest income on an effective yield basis using the components of cash flows that are reliably estimable. Other minor adjustments are made to reflect management's expectations for other components of the projected cash flow stream.
Costs and expenses decreased by $5.6 million in the nine months of 2026, primarily due to decreases of (i) $4.6 million in general and administrative expenses, principally related to lower loan securitization activity, and (ii) $1.8 million in costs of rental operations.
Other income decreased by $32.4 million in the nine months of 2026, primarily due to (i) a $25.6 million lesser realized gain on sales of conduit loans, (ii) an $8.3 million decrease in distributable earnings from unconsolidated entities and (iii) a $5.6 million increase in recognized credit losses on CMBS, partially offset by (iv) an $8.3 million increase in realized gains on sales of CMBS and a foreclosed property.
Income attributable to non-controlling interests increased $1.6 million in the nine months of 2026, primarily due to higher distributable earnings of a consolidated CMBS joint venture.
Corporate
Corporate loss increased by $82.7 million, from $337.6 million during the nine months of 2025 to $420.3 million in the nine months of 2026, primarily due to (i) an $88.4 million increase in interest expense reflecting higher average balances of unsecured senior notes and secured term loans outstanding, partially offset by lower spreads and index rates on the secured term loans, and (ii) a $2.7 million increase in base management fees, partially offset by (iii) an $8.1 million lower realized loss on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet our cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make new investments where appropriate, pay dividends to our stockholders, and other general business needs. We closely monitor our liquidity position and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months. Our strategy for managing liquidity and capital resources has not changed since December 31, 2025. Refer to our Form 10-K for a description of these strategies.
Sources of Liquidity
Our primary sources of liquidity are as follows:
Cash Flows for the Nine Months Ended September 30, 2026 (amounts in thousands)
GAAP VIE
Adjustments 		Excluding Securitization VIEs
Net cash provided by operating activities
$ 495,442 $ (2,896) $ 492,546
Cash Flows from Investing Activities:
Origination, purchase and funding of loans held-for-investment (5,108,835) (229,828) (5,338,663)
Proceeds from principal collections and sale of loans
3,666,794 - 3,666,794
Purchase and funding of investment securities (257,018) (44,454) (301,472)
Proceeds from sales, redemptions and collections of investment securities 22,523 172,414 194,937
Proceeds from sales of real estate 199,841 - 199,841
Purchases and additions to properties and other assets (411,291) - (411,291)
Net cash flows from other investments and assets 752 (5) 747
Net cash used in investing activities
(1,887,234) (101,873) (1,989,107)
Cash Flows from Financing Activities:
Proceeds from borrowings 9,988,051 - 9,988,051
Principal repayments on and repurchases of borrowings (7,710,830) (344) (7,711,174)
Payment of deferred financing costs (43,975) - (43,975)
Net proceeds from issuances of common stock 2,970 - 2,970
Payment of dividends (535,332) - (535,332)
Contributions from non-controlling interests 1,426 - 1,426
Distributions to non-controlling interests (32,957) - (32,957)
Purchase of treasury stock
(137,708) - (137,708)
Issuance of debt of consolidated VIEs 12,815 (12,815) -
Repayment of debt of consolidated VIEs (195,445) 195,445 -
Distributions of cash from consolidated VIEs 77,517 (77,517) -
Net cash provided by financing activities
1,426,532 104,769 1,531,301
Net increase in cash, cash equivalents and restricted cash
34,740 - 34,740
Cash, cash equivalents and restricted cash, beginning of period 674,647 - 674,647
Effect of exchange rate changes on cash 3,362 - 3,362
Cash, cash equivalents and restricted cash, end of period $ 712,749 $ - $ 712,749
The discussion below is on a non-GAAP basis, after removing adjustments principally resulting from the consolidation of the securitization VIEs under ASC 810. These adjustments principally relate to (i) the purchase of CMBS, RMBS, loans and real estate from consolidated VIEs, which are reflected as repayments of VIE debt on a GAAP basis and (ii) sales, principal collections and redemptions of CMBS and RMBS related to consolidated VIEs, which are reflected as VIE distributions on a GAAP basis. There is no net impact to overall cash resulting from these consolidations. Refer to Note 2 to the Condensed Consolidated Financial Statements for further discussion.
Cash and cash equivalents increased by $34.7 million during the nine months ended September 30, 2026, reflecting net cash provided by financing activities of $1.5 billion and operating activities of $492.5 million, mostly offset by net cash used in investing activities of $2.0 billion.
Net cash provided by operating activities of $492.5 million during the nine months ended September 30, 2026 related primarily to cash interest income of $973.1 million from our loans and $102.5 million from our investment securities. Other cash inflows included net rental income of $173.8 million, sales and principal collections, net of originations and purchases of loans held-for-sale of $148.4 million, servicing fees of $109.4 million, distributions from our affordable housing fund investments of $90.6 million (including $58.5 million of excess proceeds from mortgage debt refinancing) and a net change in operating assets and liabilities of $83.0 million. Offsetting these cash inflows was cash interest expense of $960.6 million, general and administrative expenses of $167.4 million and management fees of $80.3 million.
Net cash used in investing activities of $2.0 billion for the nine months ended September 30, 2026 related primarily to the origination and acquisition of loans held-for-investment of $5.3 billion, purchases and additions to properties and other assets of $411.3 million and purchase and funding of investment securities of $301.5 million. Offsetting these cash outflows was proceeds received from principal collections and sale of loans held-for-investment of $3.7 billion and investment securities of $194.9 million and proceeds from the sale of real estate of $199.8 million.
Net cash provided by financing activities of $1.5 billion for the nine months ended September 30, 2026 related primarily to borrowings on our debt, net of repayments and deferred loan costs, of $2.2 billion. Offsetting these cash inflows were dividend distributions of $535.3 million and repurchases of common stock of $137.7 million.
Our Investment Portfolio
The following is a review of our investment portfolio by segment.
Commercial and Residential Lending Segment
The following table sets forth the amount of each category of investments we owned across various property types within our Commercial and Residential Lending Segment as of September 30, 2026 and December 31, 2025 (dollars in thousands):
Face
Amount 		Carrying
Value 		Asset Specific
Financing 		Net
Investment 		Unlevered
Return on
Asset (6)
September 30, 2026
First mortgages (1) $ 17,312,222 $ 17,219,594 $ 9,771,669 $ 7,447,925 7.2 %
Subordinated mortgages (2) 4,925 4,925 - 4,925 - %
Mezzanine loans (1) 278,132 276,559 - 276,559 10.8 %
Residential loans, fair value option 232,064 212,750 195,528 17,222 5.5 % (5)
Other loans 50,288 49,720 - 49,720 9.7 %
Loans held-for-sale, fair value option, residential 2,310,526 1,990,315 1,828,804 161,511 4.4 % (5)
RMBS, available-for-sale 166,450 80,918 51,881 29,037 10.1 %
RMBS, fair value option 238,002 310,213 (3) 54,966 255,247 19.5 %
HTM debt securities (4) 325,496 324,513 97,321 227,192 7.4 %
Credit loss allowance N/A (757,751) - (757,751)
Investments in unconsolidated entities N/A 8,514 - 8,514
Properties, net N/A 876,502 29,751 846,751
$ 20,918,105 $ 20,596,772 $ 12,029,920 $ 8,566,852
December 31, 2025
First mortgages (1) $ 16,148,916 $ 16,086,585 $ 8,640,667 $ 7,445,918 7.4 %
Subordinated mortgages (2) 15,290 15,683 - 15,683 13.4 %
Mezzanine loans (1) 313,619 311,175 - 311,175 11.5 %
Other loans 51,688 51,255 - 51,255 9.1 %
Loans held-for-sale, fair value option, residential 2,455,552 2,278,067 1,929,086 348,981 4.4 % (5)
RMBS, available-for-sale 172,554 88,283 55,467 32,816 10.4 %
RMBS, fair value option 326,274 404,688 (3) 152,312 252,376 17.7 %
HTM debt securities (4) 176,067 175,473 54,202 121,271 6.1 %
Credit loss allowance N/A (453,544) - (453,544)
Equity security 722 628 - 628
Investments in unconsolidated entities N/A 8,514 - 8,514
Properties, net N/A 732,714 29,751 702,963
$ 19,660,682 $ 19,699,521 $ 10,861,485 $ 8,838,036
__________________________________________
(1)First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $1.4 billion and $1.3 billion being classified as first mortgages as of September 30, 2026 and December 31, 2025, respectively.
(2)Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
(3)Eliminated in consolidation against VIE liabilities pursuant to ASC 810.
(4)CMBS held-to-maturity ("HTM") and mandatorily redeemable preferred equity interests in commercial real estate entities.
(5)Represents the weighted average coupon of residential mortgage loans. Loans held-for-investment represent residential loans transferred from VIE assets upon redemption of a consolidated RMBS trust.
(6)Calculated using applicable index rates for variable rate investments as of the respective period end and excludes loans for which interest income is not recognized. In addition to cash coupon, unlevered return includes the amortization of deferred origination and extension fees, loan origination costs, and purchase discounts, as well as the accrual of exit fees.
As of September 30, 2026 and December 31, 2025, our Commercial and Residential Lending Segment's investment portfolio, excluding residential loans, RMBS, properties and other investments, had the following characteristics based on carrying values:
Collateral Property Type September 30, 2026 December 31, 2025
Multifamily 34.0 % 39.3 %
Industrial 19.6 % 14.8 %
Office 16.1 % 18.1 %
Hotel 10.7 % 8.2 %
Data Center
7.4 % 3.8 %
Retail 2.7 % 2.0 %
Mixed Use 1.8 % 4.9 %
Other 7.7 % 8.9 %
100.0 % 100.0 %
Geographic Location September 30, 2026 December 31, 2025
U.S. Regions:
South West 17.3 % 19.0 %
North East 16.4 % 18.9 %
West 14.0 % 12.4 %
South East 12.3 % 12.7 %
Mid Atlantic 8.3 % 6.4 %
Midwest 4.4 % 3.2 %
International:
Australia 7.4 % 6.5 %
United Kingdom 7.3 % 9.3 %
Germany 4.2 % 3.8 %
Ireland 3.5 % 3.9 %
Other Europe 4.1 % 3.4 %
Bermuda 0.8 % 0.5 %
100.0 % 100.0 %
Infrastructure Lending Segment
The following table sets forth the amount of each category of investments we owned within our Infrastructure Lending Segment as of September 30, 2026 and December 31, 2025 (dollars in thousands):
Face
Amount 		Carrying
Value 		Asset Specific
Financing 		Net
Investment 		Unlevered
Return on
Asset (1)
September 30, 2026
First priority infrastructure loans and HTM securities $ 3,110,920 $ 3,041,293 $ 2,501,721 $ 539,572 8.3 %
Credit loss allowance N/A (23,428) - (23,428)
Investments in unconsolidated entities N/A 63,165 - 63,165
$ 3,110,920 $ 3,081,030 $ 2,501,721 $ 579,309
December 31, 2025
First priority infrastructure loans and HTM securities $ 2,942,115 $ 2,880,319 $ 2,365,478 $ 514,841 8.1 %
Credit loss allowance N/A (24,667) - (24,667)
Investments in unconsolidated entities N/A 57,997 - 57,997
$ 2,942,115 $ 2,913,649 $ 2,365,478 $ 548,171
__________________________________________
(1)Calculated using applicable index rates for variable rate investments as of the respective period end and excludes loans for which interest income is not recognized. In addition to cash coupon, unlevered return includes the amortization of deferred purchase discounts.
As of September 30, 2026 and December 31, 2025, our Infrastructure Lending Segment's investment portfolio had the following characteristics based on carrying values:
Collateral Type September 30, 2026 December 31, 2025
Power
57.2 % 56.9 %
Oil & gas - midstream 30.9 % 27.5 %
Oil & gas - downstream 7.1 % 12.6 %
Oil & gas - upstream
1.7 % - %
Other
3.1 % 3.0 %
100.0 % 100.0 %
Geographic Location September 30, 2026 December 31, 2025
U.S. Regions:
Midwest 26.9 % 21.7 %
North East 25.3 % 27.2 %
South West 18.1 % 25.2 %
West 16.1 % 12.4 %
South East 9.7 % 10.3 %
Mid-Atlantic 0.9 % 1.1 %
Other 1.4 % 1.1 %
International:
Canada
1.5 % 0.8 %
Mexico 0.1 % 0.2 %
100.0 % 100.0 %
Property Segment
The following table sets forth the amount of each category of investments held within our Property Segment as of September 30, 2026 and December 31, 2025 (amounts in thousands):
September 30, 2026 December 31, 2025
Properties, net $ 2,961,467 $ 2,674,276
Lease intangibles, net 364,765 368,589
Woodstar Fund 1,677,329 1,727,499
$ 5,003,561 $ 4,770,364
The following table sets forth our net investment and other information regarding the Property Segment's properties and lease intangibles as of September 30, 2026 (dollars in thousands):
Carrying
Value 		Asset
Specific
Financing 		Net
Investment
Occupancy
Rate (1)
Weighted Average
Remaining
Lease Term
Fundamental
$ 2,773,734 $ 1,813,816 $ 959,918 100.0% 16.6 years
Office-Medical Office Portfolio
796,961 444,624 352,337 89.9% 5.2 years
D.C. Multifamily Conversion
126,340 - 126,340 N/A N/A
Subtotal-undepreciated carrying value 3,697,035 2,258,440 1,438,595
Accumulated depreciation and amortization (370,803) - (370,803)
Net carrying value $ 3,326,232 $ 2,258,440 $ 1,067,792
__________________________________________
(1)Occupancy calculated based on number of properties for our single-tenant net lease properties and square footage for multi-tenant net lease properties.
As of September 30, 2026 and December 31, 2025, our Property Segment's investment portfolio had the following geographic characteristics based on carrying values:
Geographic Location September 30, 2026 December 31, 2025
U.S. Regions:
South East 55.6 % 57.9 %
Midwest 17.2 % 14.3 %
North East 8.4 % 8.4 %
West 7.3 % 8.0 %
South West 6.5 % 6.4 %
Mid-Atlantic 4.8 % 4.8 %
International:
Canada
0.2 % 0.2 %
100.0 % 100.0 %
Investing and Servicing Segment
The following table sets forth the amount of each category of investments we owned within our Investing and Servicing Segment as of September 30, 2026 and December 31, 2025 (amounts in thousands):
Face
Amount 		Carrying
Value 		Asset
Specific
Financing 		Net
Investment
September 30, 2026
CMBS, fair value option $ 2,737,647 $ 1,247,455 (1) $ 526,123 (2) $ 721,332
Intangible assets - servicing rights N/A 68,378 (3) - 68,378
Lease intangibles, net N/A 3,415 - 3,415
Loans held-for-sale, fair value option, commercial 69,600 65,323 27,046 38,277
Investments in unconsolidated entities N/A 33,398 (4) - 33,398
Properties, net N/A 31,354 37,174 (5,820)
$ 2,807,247 $ 1,449,323 $ 590,343 $ 858,980
December 31, 2025
CMBS, fair value option $ 2,871,255 $ 1,284,863 (1) $ 480,378 (2) $ 804,485
Intangible assets - servicing rights N/A 65,533 (3) - 65,533
Lease intangibles, net N/A 3,691 - 3,691
Loans held-for-sale, fair value option, commercial 47,300 45,476 - 45,476
Investments in unconsolidated entities N/A 33,203 (4) - 33,203
Properties, net N/A 41,662 37,519 4,143
$ 2,918,555 $ 1,474,428 $ 517,897 $ 956,531
______________________________________________
(1)Includes $1.21 billion and $1.25 billion of CMBS eliminated in consolidation against VIE liabilities pursuant to ASC 810 as of September 30, 2026 and December 31, 2025, respectively. Also includes $141.8 million and $146.5 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of September 30, 2026 and December 31, 2025, respectively.
(2)Includes $23.9 million and $25.8 million of non-controlling interests in the consolidated entities which hold certain debt balances as of September 30, 2026 and December 31, 2025, respectively.
(3)Includes $36.2 million and $37.3 million of servicing rights intangibles eliminated in consolidation against VIE assets pursuant to ASC 810 as of September 30, 2026 and December 31, 2025, respectively.
(4)Includes $15.2 million and $15.0 million of investments in unconsolidated entities eliminated in consolidation against VIE assets pursuant to ASC 810 as of September 30, 2026 and December 31, 2025, respectively.
Secured Borrowings
The following table is a summary of our secured borrowings as of September 30, 2026 (dollars in thousands):
Current
Maturity
Extended
Maturity (a)
Weighted
Average
Coupon
Pledged
Asset
Carrying
Value 		Maximum
Facility
Size 		Outstanding
Balance
Approved
but
Undrawn
Capacity (b)
Unallocated
Financing
Amount (c)
Repurchase Agreements:
Commercial Loans Oct 2026 to Aug 2032
(d)
Jun 2029 to Feb 2035
(d)
Index + 1.75%
(e)
$ 12,260,129 $ 13,722,234
(f)
$ 8,415,716 $ 523,340 $ 4,783,178
Residential Loans Jul 2027 to Jul 2028 Sep 2027 to Jul 2029
SOFR + 1.53%
2,201,161 3,025,000 2,024,543 - 1,000,457
Infrastructure Loans Mar 2027 to Sep 2027 Mar 2027 to Sep 2029
SOFR + 1.90%
230,544 660,999 139,771 - 521,228
Conduit Loans Feb 2028 to Jun 2028 Feb 2029 to Jun 2029
SOFR + 2.00%
34,623 375,000 27,563 - 347,437
CMBS/RMBS Mar 2027 to Apr 2032
(g)
Mar 2027 to Oct 2032
(g)
(h) 1,138,212 895,387 689,547
(i)
15,260 190,580
Total Repurchase Agreements 15,864,669 18,678,620 11,297,140 538,600 6,842,880
Other Secured Financing:
Borrowing Base Facility Oct 2027 Oct 2029
SOFR + 2.00%
96,660 1,250,000
(j)
6,000 66,621 1,177,379
Commercial Financing Facilities Jan 2027 to Apr 2030 Jan 2027 to Feb 2035
Index + 1.90%
706,896 1,098,463
(k)
478,019 - 620,444
Infrastructure Financing Facilities Jul 2028 to Sep 2030 Oct 2030 to Jul 2033
SOFR + 1.93%
673,552 1,300,000 556,786 32,528 710,686
Property Financing
Dec 2026 to Apr 2031
(l)
Dec 2026 to Apr 2031
(l)
SOFR + 2.18%
741,047 2,070,691 573,312
(l)
- 1,497,379
Term Loans and Revolver Nov 2027 to Sep 2032 N/A
SOFR + 1.93%
N/A
(m)
2,726,723 2,526,723 200,000 -
STWD 2025-FL4 CLO
Dec 2042 N/A
SOFR + 1.65%
1,108,146 968,628 968,628 - -
STWD 2021-HTS SASB N/A N/A
SOFR + 3.65%
34,783 14,711 14,711 - -
Starwood 2026-SIF7 CLO
Jan 2038 N/A
SOFR + 1.68%
610,939 496,200 496,200 - -
Starwood 2025-SIF6 CLO
Oct 2037 N/A
SOFR + 1.72%
509,541 413,500 413,500 - -
Starwood 2025-SIF5 CLO
Apr 2037 N/A
SOFR + 1.73%
508,914 413,500 413,500 - -
Starwood 2024-SIF4 CLO
Oct 2036 N/A
SOFR + 1.93%
610,848 496,200 496,200 - -
ABS Master Series
Oct 2028 to Mar 2033 Oct 2053 to Jul 2056
5.33%
(n)
2,403,105 1,729,265 1,729,265 - -
Total Other Secured Financing 8,004,431 12,977,881 8,672,844 299,149 4,005,888
$ 23,869,100 $ 31,656,501 19,969,984 $ 837,749 $ 10,848,768
Unamortized net discount (14,701)
Unamortized deferred financing costs (105,685)
$ 19,849,598
___________________________________________
(a)Subject to certain conditions as defined in the respective facility agreement.
(b)Approved but undrawn capacity represents the total draw amount that has been approved by the lenders related to those assets that have been pledged as collateral, less the drawn amount.
(c)Unallocated financing amount represents the maximum facility size less the total draw capacity that has been approved by the lenders.
(d)For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions. In October 2026, we extended the current maturity of the facility due October 2026 to October 2027, with two additional one-year extension options. This facility had an outstanding balance of $305.0 million as of September 30, 2026.
(e)Certain facilities with an outstanding balance of $3.0 billion as of September 30, 2026 are indexed to EURIBOR, BBSY, SARON, SONIA and STIBOR. The remainder are indexed to SOFR.
(f)Certain facilities with an aggregate initial maximum facility size of $13.3 billion may be increased to $13.7 billion, subject to certain conditions. The $13.7 billion amount includes such upsizes.
(g)Certain facilities with an outstanding balance of $227.4 million as of September 30, 2026 carry a rolling 6 or 12-month term which may reset monthly or quarterly with the lender's consent. These facilities carry no maximum facility size.
(h)Certain facilities with an outstanding balance of $330.5 million as of September 30, 2026 have weighted average fixed annual interest rate of 4.05%. All other facilities are variable rate with a weighted average rate of SOFR + 1.50%.
(i)Includes: (i) $309.4 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $23.9 million outstanding on one of our repurchase facilities that represents the 49% pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 15 to the Condensed Consolidated Financial Statements).
(j)The maximum facility size as of September 30, 2026 of $615.0 million may be increased to $1.3 billion, subject to certain conditions. The $1.3 billion amount includes such upsize.
(k)Certain facilities with an aggregate initial maximum facility size of $998.5 million may be increased to $1.1 billion, subject to certain conditions. The $1.1 billion amount includes such upsizes.
(l)Of the total balance, $105.2 million relates to Fundamental, of which $86.9 million is on a warehouse facility currently maturing in December 2026 for which we are negotiating an extension.
(m)These facilities are secured by the equity interests in certain of our subsidiaries which totaled $7.5 billion as of September 30, 2026.
(n)Includes: (i) $320.8 million outstanding under ABS Series 2026-2 with a weighted average fixed rate of 5.47%; (ii) $465.8 million outstanding under ABS Series 2026-1 with a weighted average fixed rate of 5.06%; (iii) $390.2 million outstanding under ABS Series 2025-1 with a weighted average fixed rate of 5.25%; (iv) $239.9 million outstanding under ABS Series 2024-1 with a weighted average fixed rate of 5.03% and (v) $312.6 million outstanding under ABS Series 2023-2 with a weighted average fixed rate of 5.89%.
Refer to Note 10 to the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our secured financing arrangements, including a detailed discussion of new credit facilities and amendments to existing credit facilities executed since December 31, 2025.
Variance between Average and Quarter-End Credit Facility Borrowings Outstanding
The following table compares the average amount outstanding under our secured financing agreements during each quarter and the amount outstanding as of the end of each quarter, together with an explanation of significant variances (amounts in thousands):
Quarter Ended Quarter-End
Balance 		Weighted-Average
Balance During
Quarter 		Variance
December 31, 2025 17,934,109 17,281,610 652,499 (a)
March 31, 2026 18,974,419 18,352,109 622,310 (a)
June 30, 2026 18,932,361 19,201,008 (268,647)
September 30, 2026 19,969,984 19,777,755 192,229
__________________________________________________
(a)Variance primarily due to borrowings on secured debt needed to fund commercial loans that were newly originated close to the end of the quarter.
Borrowings under Unsecured Senior Notes
During the three and nine months ended September 30, 2026, the weighted average effective borrowing rate on our unsecured senior notes was 6.5% and 6.3%, respectively. During the three and nine months ended September 30, 2025, the weighted average effective borrowing rate on our unsecured senior notes was 6.3% and 6.2%, respectively. The effective borrowing rate includes the effects of underwriter purchase discount.
Refer to Note 11 to the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our unsecured senior notes.
Scheduled Principal Repayments on Investments and Overhang on Financing Facilities
The following scheduled and/or projected principal repayments on our investments were based on amounts outstanding and extended contractual maturities of those investments as of September 30, 2026. The column entitled "Projected/Required Repayments of Financing" generally represents the extended contractual maturity of each credit facility. However, in the case of commercial loans, if management expects the underlying collateral to repay earlier than its fully extended maturity, this earlier date was utilized. If management expects the underlying collateral to repay later than its fully extended maturity, we assume the facility is not extended, even though some form of extension is often granted by the lender (amounts in thousands):
Scheduled/Projected Principal
Repayments on Loans
and HTM Securities
Scheduled/Projected
Principal Repayments
on RMBS and CMBS 		Projected/Required
Repayments of
Financing
Total Principal
Inflows Net of
Financing Outflows
Fourth Quarter 2026 $ 1,573,364 $ 21,185 $ (733,526) $ 861,023
First Quarter 2027 586,474 23,464 (214,084) 395,854
Second Quarter 2027 1,107,286 70,184 (776,979) 400,491
Third Quarter 2027 1,273,155 64,414 (1,370,678) (33,109)
Total $ 4,540,279 $ 179,247 $ (3,095,267) $ 1,624,259
In the normal course of business, the Company is in discussions with its lenders to extend, amend or replace any financing facilities which contain near term expirations.
Issuances of Equity Securities
We may raise funds through capital market transactions by issuing capital stock. There can be no assurance, however, that we will be able to access the capital markets at any particular time or on any particular terms. We have authorized 100,000,000 shares of preferred stock and 500,000,000 shares of common stock. At September 30, 2026, we had 100,000,000 shares of preferred stock available for issuance and 135,943,315 shares of common stock available for issuance.
Other Potential Sources of Financing
In the future, we may also use other sources of financing to fund the acquisition of our target assets and maturities of our unsecured senior notes, including other secured as well as unsecured forms of borrowing and sale of senior loan interests and other assets.
Repurchases of Equity Securities and Convertible Senior Notes
In February 2026, our board of directors authorized the repurchase of up to $400.0 million of our outstanding common shares and convertible senior notes over a period of one year. Purchases made pursuant to the program will be made either in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases are discretionary and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. During the three and nine months ended September 30, 2026, we repurchased 6,679,735 and 8,388,073 shares of common stock for $107.8 million and $137.7 million, respectively, under the repurchase program. As of September 30, 2026, we had $262.5 million of remaining capacity to repurchase common stock and/or convertible senior notes under the repurchase program.
Leverage Policies
Our strategies with regards to use of leverage have not changed significantly since December 31, 2025. Refer to our Form 10-K for a description of our strategies regarding use of leverage.
Cash Requirements
Dividends
U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We generally intend to distribute substantially all of our taxable income (which does not necessarily equal our GAAP net income) to our stockholders each year, if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating and debt service requirements. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. Refer to Note 17 to the Condensed Consolidated Financial Statements and our Form 10-K for a detailed dividend history.
Contractual Obligations and Commitments
Our material contractual obligations and commitments as of September 30, 2026 are as follows (amounts in thousands):
Total Less than
1 year 		1 to 3 years 3 to 5 years More than
5 years
Secured financings (a) $ 15,437,980 $ 2,028,889 $ 6,083,240 $ 6,135,973 $ 1,189,878
Securitized financing (b)
4,532,004 173,534 586,694 1,341,347 2,430,429
Unsecured senior notes 4,530,750 380,750 1,600,000 2,550,000 -
Future funding commitments:
Commercial Lending (c) 2,757,127 1,643,831 1,107,517 5,779 -
Infrastructure Lending (d) 1,003,332 978,077 25,255 - -
Property Segment (e) 71,939 71,939 - - -
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(a)Represents the earlier of (i) the fully extended contractual maturity of each credit facility or (ii) the contractual maturity, on a fully extended basis as applicable, of each of the investments that have been pledged as collateral under the respective credit facility. Refer to Note 10 to the Condensed Consolidated Financial Statements for the expected maturities by year.
(b)Represents the fully extended maturity of the underlying collateral.
(c)Excludes $284.6 million of loan funding commitments in which management projects the Company will not be obligated to fund in the future due to repayments made by the borrower earlier than, or in excess of, expectations.
(d)Represents contractual commitments of $364.2 million under revolvers and letters of credit, $269.1 million under delayed draw term loans and $370.0 million of outstanding infrastructure loan purchase commitments.
(e)Represents future construction funding commitments in our Property Segment related to development projects which have estimated rental revenue commencement dates between October 2026 and September 2027.
The table above does not include interest payable, amounts due under our management agreement, amounts due under our derivative agreements or amounts due under guarantees as those contracts do not have fixed and determinable payments.
Our secured financings and the CLO and SASB portions of our securitized financing consist primarily of matched-term funding for our loans and investment securities and long-term mortgages on our owned properties. Repayments of such facilities are generally made from proceeds from maturities, prepayments or sales of such investments and operating cash flows from owned properties. In the normal course of business, we are in discussions with our lenders to extend, amend or replace any financing facilities which contain near term expirations. The ABS securitized financing of Fundamental's properties is expected to be refinanced with similar ABS financing at or prior to its respective maturity.
Our unsecured senior notes are expected to be repaid from a combination of available cash on hand, approved but undrawn capacity under our secured financing agreements, and/or equity issuances or other potential sources of financing, as discussed above, including issuances of new unsecured senior notes.
Our future funding commitments are expected to be primarily matched-term funded with secured or securitized financing, with any difference funded from available cash on hand or other potential sources of financing discussed above.
Critical Accounting Estimates
Refer to the section of our Form 10-K entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" for a full discussion of our critical accounting estimates. Our critical accounting estimates have not materially changed since December 31, 2025.
Recent Accounting Developments
Refer to Note 2 to the Condensed Consolidated Financial Statements for a discussion of recent accounting developments and the expected impact to the Company.
Starwood Property Trust Inc. published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 12:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]