Starwood Property Trust Inc.

11/10/2025 | Press release | Distributed by Public on 11/10/2025 05:59

Quarterly Report for Quarter Ending September 30, 2025 (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, 2024 (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, 2025 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.
Economic Environment
Although the Federal Reserve began to lower interest rates in September 2025, after having held rates steady for a year, it is not clear what actions it may take going forward given the uncertain economic effects of tariffs which increase the possibility of an economic slowdown as well as inflationary pressures in the U.S. Elevated interest rates and tariffs over time may adversely affect our borrowers and our tenants. Higher costs may dampen consumer spending and slow income growth, which may negatively impact the collateral underlying certain of our loans and certain of our commercial assets subject to net lease whose customer base could be adversely impacted. Rates can also impact the value of real estate, including the real estate
we own as well as the real estate collateralizing our loans. It remains difficult to predict the full impact of recent events and any future changes in tariffs, interest rates, inflation and overall economic activity.
In addition, following the onset of the COVID-19 pandemic, the U.S. office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce and the multifamily sector has been strained by sustained higher interest rates. These negative factors have been considered in the determination of our current expected credit loss ("CECL") allowance as discussed in Note 4 to the Condensed Consolidated Financial Statements. We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves, particularly if market conditions relevant to the office sector do not improve. Any such reserve increases are difficult to predict.
Developments During the Third Quarter of 2025
Commercial and Residential Lending Segment
•Originated $1.4 billion of commercial loans during the quarter, including the following:
◦$550.0 million first mortgage and mezzanine loan secured by a 12-property multifamily portfolio located primarily in Arizona, which the Company fully funded.
◦$500.0 million first mortgage loan secured by a 42-asset industrial portfolio located in New York, of which the Company funded $483.6 million.
◦$161.0 million first mortgage and mezzanine loan secured by a multifamily property located in New York, of which the Company funded $145.2 million.
◦$64.0 million first mortgage loan secured by a multifamily community located in Illinois, of which the Company funded $61.7 million.
◦$52.2 million first mortgage and mezzanine loan secured by a luxury condominium tower located in New York, of which the Company funded $40.2 million.
•Funded $219.4 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $1.3 billion ($389.9 million, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
•Amended several commercial credit facilities resulting in an aggregate net upsize of $192.4 million and extended the weighted average maturity on amended facilities by 1.2 years to 2.6 years.
Infrastructure Lending Segment
•Committed $790.9 million for new infrastructure loans, of which the Company funded $678.3 million, and also funded $19.4 million of pre-existing infrastructure loan commitments.
•Received proceeds of $691.1 million from principal repayments on our infrastructure loans and bonds.
Property
•In July 2025, acquired Fundamental Income Properties, LLC ("Fundamental") by way of merger. The purchase price totaled $2.2 billion, inclusive of $1.3 billion of indebtedness assumed. See Note 3 to the Condensed Consolidated Financial Statements for further discussion.
•Acquired eight additional net lease properties for cash of $39.3 million and the non-cash conversion of two existing loans for the development of net lease properties totaling $14.4 million. We also sold one net lease property for $0.5 million.
•In August 2025, refinanced $185.1 million of the Woodstar Fund investments' mortgage debt with $367.7 million of new debt that carries an initial term of 10 years, and a coupon of SOFR + 1.75%.
Investing and Servicing
•Originated commercial conduit loans of $242.0 million.
•Received proceeds of $169.3 million from sales of previously originated commercial conduit loans and priced $82.3 million of previously originated commercial conduit loans in two securitizations that settled subsequent to September 30, 2025.
•Obtained five new special servicing assignments for CMBS trusts with a total unpaid principal balance of $3.6 billion, while $6.7 billion matured, bringing our total named special servicing portfolio to $99.0 billion.
Corporate
•Issued 27.1 million shares of common stock for proceeds of $534.4 million.
•Entered into a $700.0 million term loan facility that carries a seven-year term, an annual interest rate of SOFR + 2.25%, and an issue discount of 50 bps.
•Amended our $682.6 million November 2027 and $893.3 million January 2030 term loan facilities, reducing the spreads by 50 bps and 25 bps, to SOFR + 1.75% and SOFR + 2.00%, respectively.
Developments During the Nine Months Ended September 30, 2025
Commercial and Residential Lending Segment
•Originated or acquired $4.7 billion of commercial loans during the period, including the following:
•$550.0 million first mortgage and mezzanine loan secured by a 12-property multifamily portfolio located primarily in Arizona, which the Company fully funded.
•$550.0 million first mortgage and mezzanine loan for the construction of a pre-leased data center located in Utah, of which the Company funded $315.1 million.
•$500.0 million first mortgage loan secured by a 42-asset industrial portfolio located in New York, of which the Company funded $483.6 million.
•$412.0 million first mortgage loan secured by a multifamily portfolio located in Texas, which the Company fully funded.
•$350.0 million first mortgage and mezzanine loan secured by a 272-unit high-rise luxury condominium located in New York, of which the Company sold the $280.0 million first mortgage and retained the $70.0 million mezzanine loan. The Company funded $58.8 million of the mezzanine loan. Refer to Note 12 to the Condensed Consolidated Financial Statements for further discussion.
•$287.7 million first mortgage loan for the construction of a fully leased data center located in Virginia, of which the Company funded $44.9 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
•€220.5 million ($228.9 million) first mortgage loan secured by a portfolio of apartment buildings located in Germany, of which the Company funded $171.0 million.
•€189.7 million ($214.3 million) first mortgage loan secured by a logistics portfolio located in Czech Republic and Slovakia, of which the Company funded $187.0 million.
•$212.8 million first mortgage loan for the construction of a fully leased data center located in Virginia, of which the Company funded $131.4 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
•$190.3 million first mortgage loan for the construction of a luxury 81 unit condominium project located in Florida, of which the Company funded $64.4 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
•Funded $544.2 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $2.1 billion ($0.8 billion, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
•Sold an equity interest originally obtained in connection with a 2013 loan origination for gross proceeds of $70.0 million and recognized a gain of $51.4 million.
•Sold commercial real estate in Texas that was previously acquired through equity control in May 2022 for gross proceeds of $60.0 million and recognized a net gain of $4.1 million.
•Redeemed at par the third party financing for our STWD 2019-FL1 CLO for $220.1 million.
•Amended several commercial credit facilities resulting in an aggregate net upsize of $1.5 billion and extended the weighted average maturity on amended facilities by 1.4 years to 3.1 years.
Infrastructure Lending Segment
•Committed $2.2 billion for new infrastructure loans, of which the Company funded $1.9 billion, and also funded $28.0 million of pre-existing infrastructure loan commitments.
•Received proceeds of $1.4 billion from principal repayments on our infrastructure loans and bonds.
•Refinanced a pool of our infrastructure loans held-for-investment in April 2025 through a CLO, Starwood 2025-SIF5. The CLO has a contractual maturity of April 2037 and a weighted average cost of financing of SOFR + 1.94%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $500.0 million of notes, of which $413.5 million of notes were purchased by third party investors and $86.5 million of subordinated notes were retained by us. In connection therewith, we redeemed at par the third party financing for our STWD 2021-SIF2 CLO for $410.0 million and contributed certain loans previously held in that CLO to Starwood 2025-SIF5.
•Amended an infrastructure credit facility, increasing the facility size by $125.0 million and reducing the spread by 20 bps.
Property
•In July 2025, acquired Fundamental by way of merger. The purchase price totaled $2.2 billion, inclusive of $1.3 billion of indebtedness assumed. See Note 3 to the Condensed Consolidated Financial Statements for further discussion.
•Acquired eight additional net lease properties for cash of $39.3 million and the non-cash conversion of two existing loans for the development of net lease properties totaling $14.4 million. We also sold a net lease property for $0.5 million.
•In August 2025, refinanced $185.1 million of the Woodstar Fund investments' mortgage debt with $367.7 million of new debt that carries an initial term of 10 years, and a coupon of SOFR + 1.75%.
Investing and Servicing Segment
•Originated commercial conduit loans of $1.0 billion.
•Received proceeds of $912.4 million from sales of previously originated commercial conduit loans and priced $82.3 million of previously originated commercial conduit loans in two securitizations that settled subsequent to September 30, 2025.
•Acquired CMBS for a purchase price of $69.0 million, of which $1.4 million related to non-controlling interests, and sold CMBS for gross proceeds of $4.2 million.
•Obtained eight new special servicing assignments for CMBS trusts with a total unpaid principal balance of $5.5 billion, while $16.1 billion matured, bringing our total named special servicing portfolio to $99.0 billion.
Corporate
•Issued 27.1 million shares of common stock for proceeds of $534.4 million.
•Entered into a $700.0 million term loan facility that carries a seven-year term, an annual interest rate of SOFR + 2.25%, and an issue discount of 50 bps.
•Amended our $682.6 million November 2027 and $893.3 million January 2030 term loan facilities, reducing the spreads by 50 bps and 25 bps, to SOFR + 1.75% and SOFR + 2.00%, respectively.
•Issued $500.0 million of 6.50% Senior Notes due 2030 in April 2025 and swapped the notes to a floating rate of SOFR + 2.61%.
•Entered into a new ATM Agreement with a syndicate of financial institutions to sell shares of the Company's common stock of up to $500.0 million from time to time, through an "at the market" equity offering program. During the nine months, we issued 1.6 million shares under the ATM Agreement for gross proceeds of $31.6 million at an average share price of $20.22.
•Repaid the remaining $250.0 million of $500.0 million 4.75% Senior Notes due March 2025 upon maturity.
•Amended our January 2030 term loan facility in January 2025, increasing the facility size to $900.0 million, reducing the spread by 73 bps and extending the maturity date from July 2026 to January 2030. We also amended our existing revolving credit facility, increasing the facility by $50.0 million, to $200.0 million, and extending the maturity date from April 2026 to January 2030.
Subsequent Events
Refer to Note 24 to the Condensed Consolidated Financial Statements for disclosure regarding significant transactions that occurred subsequent to September 30, 2025.
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, 2025 and June 30, 2025 and for the nine months ended September 30, 2025 and 2024 by business segment (amounts in thousands):
For the Three Months Ended
For the Nine Months Ended
Revenues: September 30, 2025 June 30, 2025 $ Change September 30, 2025 September 30, 2024 $ Change
Commercial and Residential Lending Segment $ 343,126 $ 343,907 $ (781) $ 1,012,499 $ 1,209,615 $ (197,116)
Infrastructure Lending Segment 77,718 67,184 10,534 206,527 197,607 8,920
Property Segment 46,196 16,477 29,719 79,222 53,437 25,785
Investing and Servicing Segment 60,888 53,785 7,103 173,548 149,959 23,589
Corporate 693 536 157 1,324 1,951 (627)
Securitization VIE eliminations (39,743) (37,606) (2,137) (121,779) (120,115) (1,664)
488,878 444,283 44,595 1,351,341 1,492,454 (141,113)
Costs and expenses:
Commercial and Residential Lending Segment 231,441 207,310 24,131 602,429 870,386 (267,957)
Infrastructure Lending Segment 48,337 48,334 3 139,536 132,054 7,482
Property Segment 58,309 22,115 36,194 102,616 74,065 28,551
Investing and Servicing Segment 33,909 37,725 (3,816) 107,338 112,762 (5,424)
Corporate 117,655 115,205 2,450 352,840 314,418 38,422
Securitization VIE eliminations (207) (210) 3 (612) (626) 14
489,444 430,479 58,965 1,304,147 1,503,059 (198,912)
Other income (loss):
Commercial and Residential Lending Segment 42,630 26,594 16,036 88,780 137,123 (48,343)
Infrastructure Lending Segment (497) 1,014 (1,511) 112 (736) 848
Property Segment (8,256) 4,340 (12,596) (993) 100,326 (101,319)
Investing and Servicing Segment 22,219 36,058 (13,839) 50,540 (14,027) 64,567
Corporate (1,793) 16,161 (17,954) 41,707 5,718 35,989
Securitization VIE eliminations 39,536 37,396 2,140 121,167 119,489 1,678
93,839 121,563 (27,724) 301,313 347,893 (46,580)
Income (loss) before income taxes:
Commercial and Residential Lending Segment 154,315 163,191 (8,876) 498,850 476,352 22,498
Infrastructure Lending Segment 28,884 19,864 9,020 67,103 64,817 2,286
Property Segment (20,369) (1,298) (19,071) (24,387) 79,698 (104,085)
Investing and Servicing Segment 49,198 52,118 (2,920) 116,750 23,170 93,580
Corporate (118,755) (98,508) (20,247) (309,809) (306,749) (3,060)
93,273 135,367 (42,094) 348,507 337,288 11,219
Income tax provision
(13,343) (671) (12,672) (17,780) (27,533) 9,753
Net income attributable to non-controlling interests
(7,370) (4,882) (2,488) (16,098) (1,465) (14,633)
Net income attributable to Starwood Property Trust, Inc. $ 72,560 $ 129,814 $ (57,254) $ 314,629 $ 308,290 $ 6,339
Three Months Ended September 30, 2025 Compared to the Three Months Ended June 30, 2025
Commercial and Residential Lending Segment
Revenues
For the three months ended September 30, 2025, revenues of our Commercial and Residential Lending Segment decreased $0.8 million to $343.1 million, compared to $343.9 million for the three months ended June 30, 2025. This was primarily due to a decrease of $2.9 million in interest income from investment securities, reflecting lower balances due to payoffs, partially offset by an increase in interest income from loans of $2.3 million. The increase in interest income from loans was comprised of a $2.7 million increase from commercial loans primarily reflecting higher average balances, partially offset by a $0.4 million decrease from residential loans.
Costs and Expenses
For the three months ended September 30, 2025, costs and expenses of our Commercial and Residential Lending Segment increased $24.1 million to $231.4 million, compared to $207.3 million for the three months ended June 30, 2025. This increase was primarily due to increases of $23.1 million in the credit loss provision and $1.1 million 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 primarily reflects a $27.2 million specific allowance provided on a mezzanine loan deemed credit deteriorated in the 2025 third quarter. The increase in interest expense was primarily due to higher average borrowings outstanding.
Net Interest Income (amounts in thousands)
For the Three Months Ended
September 30, 2025 June 30, 2025 Change
Interest income from loans $ 315,894 $ 313,595 $ 2,299
Interest income from investment securities 18,405 21,335 (2,930)
Interest expense (181,639) (180,494) (1,145)
Net interest income $ 152,660 $ 154,436 $ (1,776)
For the three months ended September 30, 2025, net interest income of our Commercial and Residential Lending Segment decreased $1.7 million to $152.7 million, compared to $154.4 million for the three months ended June 30, 2025. This decrease reflects the net decrease in interest income and the increase in interest expense on our secured financing facilities, both as discussed in the sections above.
During the three months ended September 30, 2025 and June 30, 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 Three Months Ended
September 30, 2025 June 30, 2025
Commercial 8.1 % 8.3 %
Residential 5.0 % 5.0 %
Overall 7.6 % 7.8 %
For the three months ended September 30, 2025, the weighted average unlevered yields on our commercial and residential loans were relatively consistent with the three months ended June 30, 2025.
During the three months ended September 30, 2025 and June 30, 2025, the Commercial and Residential Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.3% and 6.5%, respectively. Interest rate hedges had the effect of reducing these weighted average borrowing costs to 5.9% and 6.0% during the three months ended September 30, 2025 and June 30, 2025, respectively.
Other Income
For the three months ended September 30, 2025, other income of our Commercial and Residential Lending Segment increased $16.0 million to $42.6 million compared to $26.6 million for the three months ended June 30, 2025. This increase was primarily due to (i) a $130.4 million favorable change in gain (loss) on derivatives and (ii) a $32.1 million greater increase in fair value of residential loans, partially offset by (iii) a $95.3 million unfavorable change in foreign currency gain (loss), (iv) a $30.6 million lesser gain on sale of investments and other assets and (v) the nonrecurrence of a $20.8 million gain on extinguishment of debt primarily related to the sale of a foreclosed property in the second quarter of 2025. The favorable change in gain (loss) on derivatives in the third quarter of 2025 reflects (i) a $113.6 million favorable change in gain (loss) on foreign currency hedges and (ii) a $16.8 million lower loss on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale 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 favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the pound sterling ("GBP") and Euro ("EUR"), partially offset by a weakening against the Australian dollar ("AUD"), in the third quarter of 2025, compared to a weakening of the U.S. dollar against each of those currencies in the second quarter of 2025.
Infrastructure Lending Segment
Revenues
For the three months ended September 30, 2025, revenues of our Infrastructure Lending Segment increased $10.5 million to $77.7 million, compared to $67.2 million for the three months ended June 30, 2025. This was primarily due to a $10.8 million increase in interest income from loans reflecting higher prepayment related income and average loan balances.
Costs and Expenses
For the three months ended September 30, 2025 and June 30, 2025, costs and expenses of our Infrastructure Lending Segment remained relatively unchanged at $48.3 million. A $2.3 million increase in interest expense, primarily reflecting higher average borrowings outstanding, was offset by decreases in other costs and expenses.
Net Interest Income (amounts in thousands)
For the Three Months Ended
September 30, 2025 June 30, 2025 Change
Interest income from loans $ 76,724 $ 65,949 $ 10,775
Interest income from investment securities 150 148 2
Interest expense (41,402) (39,106) (2,296)
Net interest income $ 35,472 $ 26,991 $ 8,481
For the three months ended September 30, 2025, net interest income of our Infrastructure Lending Segment increased $8.5 million to $35.5 million, compared to $27.0 million for the three months ended June 30, 2025. The increase reflects the increase in interest income from loans, partially offset by the increase in interest expense on the secured financing facilities used to fund this segment's investment portfolio, both as discussed above.
During the three months ended September 30, 2025 and June 30, 2025, the weighted average unlevered yield on the Infrastructure Lending Segment's loans and investment securities, excluding those for which interest income is not recognized, was 9.3% and 9.1%, respectively, primarily reflecting higher prepayment related income in the third quarter of 2025.
During both the three months ended September 30, 2025 and June 30, 2025, the Infrastructure Lending Segment's weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 6.9%.
Other Income (Loss)
For the three months ended September 30, 2025, other income (loss) of our Infrastructure Lending Segment decreased $1.5 million to a loss of $0.5 million, compared to income of $1.0 million for the three months ended June 30, 2025, primarily due to an unfavorable change in earnings (loss) 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
$ 28,934 $ 15,355 $ 20,182 $ (7,967) $ (35) $ (14,605)
Medical Office Portfolio 621 (50) 564 10 - 117
Woodstar Fund 169 - (1) - (4,792) (4,622)
D.C. Multifamily Conversion
- - - - (210) (210)
Other/Corporate (5) - 144 - 398 249
Total $ 29,719 $ 15,305 $ 20,889 $ (7,957) $ (4,639) $ (19,071)
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, 2025, revenues of our Property Segment increased $29.7 million to $46.2 million, compared to $16.5 million for the three months ended June 30, 2025, primarily due to Fundamental, which contributed rental income for the period from July 23, 2025 to September 30, 2025.
Costs and Expenses
For the three months ended September 30, 2025, costs and expenses of our Property Segment increased $36.2 million to $58.3 million, compared to $22.1 million for the three months ended June 30, 2025, primarily due to Fundamental, which introduced (i) higher interest expense from the liabilities assumed and higher general and administrative expenses totaling $20.2 million and (ii) higher depreciation and amortization of $15.4 million from the assets acquired.
Other Income (Loss)
For the three months ended September 30, 2025, other income (loss) of our Property Segment decreased $12.6 million to a loss of $8.3 million compared to income of $4.3 million for the three months ended June 30, 2025. The decrease is primarily due to (i) an $8.0 million loss on derivatives which hedge the pending securitization of Fundamental collateral currently on a warehouse line and the pending refinance of an existing ABS facility, as well as (ii) a $4.8 million decrease in income attributable to investments of the Woodstar Fund, primarily related to unrealized fair value changes.
Investing and Servicing Segment
Revenues
For the three months ended September 30, 2025, revenues of our Investing and Servicing Segment increased $7.1 million to $60.9 million, compared to $53.8 million for the three months ended June 30, 2025. The increase in revenues is primarily due to (i) a $9.7 million increase in servicing fees principally related to default interest and consent fees, partially offset by (ii) a $3.1 million decrease in interest income from conduit loans primarily reflecting lower average balances held during the third quarter.
Costs and Expenses
For the three months ended September 30, 2025, costs and expenses of our Investing and Servicing Segment decreased $3.8 million to $33.9 million, compared to $37.7 million for the three months ended June 30, 2025. The decrease is primarily due to a $2.5 million decrease in general and administrative expenses, principally related to decreased loan securitization activity, and a $1.0 million decrease in interest expense primarily related to the financing of conduit loan balances.
Other Income
For the three months ended September 30, 2025, other income of our Investing and Servicing Segment decreased $13.9 million to $22.2 million, compared to $36.1 million for the three months ended June 30, 2025. The decrease is primarily due to a $9.6 million lower gain in fair value of conduit loans and a $2.8 million decrease in earnings from unconsolidated entities.
Corporate and Other Items
Corporate Costs and Expenses
For the three months ended September 30, 2025, corporate expenses increased $2.5 million to $117.7 million, compared to $115.2 million for the three months ended June 30, 2025. This was primarily due to increases of $1.4 million in management fees and $1.0 million in interest expense.
Corporate Other Income (Loss)
For the three months ended September 30, 2025, corporate other income (loss) decreased $18.0 million to a loss of $1.8 million, compared to income of $16.2 million for the three months ended June 30, 2025. This was due to a an unfavorable change in gain (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 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, 2025, our income tax provision increased $12.6 million to $13.3 million compared to $0.7 million for the three months ended June 30, 2025. This increase was due to higher taxable income of our TRSs in the third quarter of 2025 compared to the second quarter of 2025.
Net Income Attributable to Non-controlling Interests
During the three months ended September 30, 2025, net income attributable to non-controlling interests increased $2.5 million to $7.4 million, compared to $4.9 million during the three months ended June 30, 2025. The increase was primarily due to non-controlling interests in a favorable change in unrealized gains (losses) of a consolidated CMBS joint venture in the third quarter of 2025.
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Commercial and Residential Lending Segment
Revenues
For the nine months ended September 30, 2025, revenues of our Commercial and Residential Lending Segment decreased $197.1 million to $1.0 billion, compared to $1.2 billion for the nine months ended September 30, 2024. This decrease was primarily due to decreases in interest income from loans of $183.0 million and investment securities of $26.5 million, partially offset by a $9.1 million increase in rental income from foreclosed properties. The decrease in interest income from loans reflects (i) a $176.2 million decrease from commercial loans, reflecting lower average index rates and spreads, additional loans placed on nonaccrual, lower prepayment related income and lower average balances, and (ii) a $6.8 million decrease from residential loans principally due to lower average balances. The decrease in interest income from investment securities was primarily due to lower average commercial investment balances due to repayments.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Commercial and Residential Lending Segment decreased $268.0 million to $602.4 million, compared to $870.4 million for the nine months ended September 30, 2024. This decrease was primarily due to decreases of $138.3 million in credit loss provision and $134.4 million in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio. The credit loss provision decreased primarily due to improvement in the macroeconomic outlook. The decrease in interest expense was primarily due to lower average borrowings outstanding due to paydowns from net loan repayments and excess cash balances and the effect of lower average index rates.
Net Interest Income (amounts in thousands)
For the Nine Months Ended September 30,
2025 2024 Change
Interest income from loans $ 919,788 $ 1,102,810 $ (183,022)
Interest income from investment securities 63,629 90,170 (26,541)
Interest expense (527,684) (662,124) 134,440
Net interest income $ 455,733 $ 530,856 $ (75,123)
For the nine months ended September 30, 2025, net interest income of our Commercial and Residential Lending Segment decreased $75.1 million to $455.7 million, compared to $530.9 million for the nine months ended September 30, 2024. This decrease reflects the decrease in interest income, partially offset by the decrease in interest expense on our secured financing facilities, both as discussed in the sections above.
During the nine months ended September 30, 2025 and 2024, 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,
2025 2024
Commercial 8.3 % 9.7 %
Residential 5.0 % 5.0 %
Overall 7.8 % 9.0 %
The weighted average unlevered yield on our commercial loans decreased primarily due to lower average index rates and spreads and lower prepayment related income. The unlevered yield on our residential loans was relatively unchanged.
During the nine months ended September 30, 2025 and 2024, the Commercial and Residential Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.5% and 7.6%, respectively. The decrease in borrowing rates primarily reflects lower average index rates. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 5.9% and 6.7% during the nine months ended September 30, 2025 and 2024, respectively.
Other Income
For the nine months ended September 30, 2025, other income of our Commercial and Residential Lending Segment decreased $48.3 million to $88.8 million, compared to $137.1 million for the nine months ended September 30, 2024. This decrease primarily reflects (i) a $179.3 million unfavorable change in gain (loss) on derivatives, partially offset by (ii) an $81.9 million increase in foreign currency gain, (iii) a $32.7 million net gain on sale of investments and other assets and (iv) a $20.6 million increased gain on extinguishment of debt primarily related to the sale of a foreclosed property in the nine months of 2025. The unfavorable change in gain (loss) on derivatives during the nine months ended September 30, 2025 reflects (i) a $100.5 million increased loss on foreign currency hedges and (ii) a $78.8 million unfavorable change in gain (loss) on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale 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 increased foreign currency gain and the increased loss on foreign currency hedges reflect the weakening of the U.S. dollar against the GBP, EUR and AUD during the nine months of 2025, compared to a lesser weakening of the U.S. dollar against each of those currencies in the nine months of 2024.
Infrastructure Lending Segment
Revenues
For the nine months ended September 30, 2025, revenues of our Infrastructure Lending Segment increased $8.9 million to $206.5 million, compared to $197.6 million for the nine months ended September 30, 2024. This increase was primarily due to an $8.6 million increase in interest income from loans, reflecting higher average balances and prepayment related income, partially offset by the effects of lower average index rates and spreads.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Infrastructure Lending Segment increased $7.4 million to $139.5 million, compared to $132.1 million for the nine months ended September 30, 2024. The increase was primarily due to increases of $4.7 million in general, administrative and other expenses, $2.3 million in credit loss provision and $0.4 million in interest expense, reflecting higher average borrowings outstanding, partially offset by lower average index rates.
Net Interest Income (amounts in thousands)
For the Nine Months Ended September 30,
2025 2024 Change
Interest income from loans $ 203,129 $ 194,526 $ 8,603
Interest income from investment securities 452 391 61
Interest expense (115,662) (115,229) (433)
Net interest income $ 87,919 $ 79,688 $ 8,231
For the nine months ended September 30, 2025, net interest income of our Infrastructure Lending Segment increased $8.2 million to $87.9 million, compared to $79.7 million for the nine months ended September 30, 2024. The increase reflects the increase in interest income from loans, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.
During the nine months ended September 30, 2025 and 2024, 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 9.7% and 10.6%, respectively, reflecting lower average index rates and spreads, partially offset by higher prepayment related income, in the nine months of 2025.
During the nine months ended September 30, 2025 and 2024, the Infrastructure Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.9% and 8.0%, respectively, reflecting lower average index rates in the nine months of 2025.
Other Income (Loss)
For the nine months ended September 30, 2025 and 2024, other income (loss) of our Infrastructure Lending Segment improved $0.8 million to income of $0.1 million, compared to a loss of $0.7 million for the nine months ended September 30, 2024, primarily due to an improvement in earnings (loss) of 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
$ 28,934 $ 15,355 $ 20,182 $ (7,967) $ (35) $ (14,605)
Master Lease Portfolio (4,821) - (1,520) - (90,795) (94,096)
Medical Office Portfolio 1,594 (129) (5,798) (1,557) 1,046 7,010
Woodstar Fund 140 - 6 - (955) (821)
D.C. Multifamily Conversion
- - - - (1,153) (1,153)
Other/Corporate (62) - 455 - 97 (420)
Total $ 25,785 $ 15,226 $ 13,325 $ (9,524) $ (91,795) $ (104,085)
Revenues
For the nine months ended September 30, 2025, revenues of our Property Segment increased $25.8 million to $79.2 million, compared to $53.4 million for the nine months ended September 30, 2024. The increase was primarily due to Fundamental, which contributed rental income for the period from July 23, 2025 to September 30, 2025, the effect of which was partially offset by the sale of our Master Lease Portfolio on February 29, 2024.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Property Segment increased $28.5 million to $102.6 million, compared to $74.1 million for the nine months ended September 30, 2024. The increase is primarily due to Fundamental, which introduced (i) higher interest expense from the liabilities assumed and higher general and administrative expenses totaling $20.2 million and (ii) higher depreciation and amortization of $15.4 million from the assets acquired, the effect of which was partially offset by (iii) a $6.7 million decrease in interest expense on variable rate borrowings of the Medical Office Portfolio, reflecting lower refinanced balances and index rates, and (iv) the sale of our Master Lease Portfolio on February 29, 2024.
Other Income (Loss)
For the nine months ended September 30, 2025, other income of our Property Segment decreased $101.3 million to a loss of $1.0 million, compared to income of $100.3 million for the nine months ended September 30, 2024. The decrease is primarily due to (i) the nonrecurrence of a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024 and (ii) an $8.0 million loss on derivatives which hedge the pending securitization of Fundamental collateral currently on a warehouse line and the pending refinance of an existing ABS facility.
Investing and Servicing Segment
Revenues
For the nine months ended September 30, 2025, revenues of our Investing and Servicing Segment increased $23.5 million to $173.5 million, compared to $150.0 million for the nine months ended September 30, 2024. The increase in revenues is primarily due to (i) a $20.3 million increase in servicing fees principally related to default interest and (ii) a $2.6 million increase in interest income from CMBS investments primarily due to higher interest recoveries.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Investing and Servicing Segment decreased $5.5 million to $107.3 million, compared to $112.8 million for the nine months ended September 30, 2024. The decrease is primarily due to decreases of (i) $4.2 million in interest expense principally related to the financing of conduit loan balances and (ii) $2.7 million in general and administrative expenses.
Other Income (Loss)
For the nine months ended September 30, 2025, other income (loss) of our Investing and Servicing Segment improved $64.5 million to income of $50.5 million, compared to a loss of $14.0 million for the nine months ended September 30, 2024. The improvement was primarily due to (i) a $55.1 million lesser decrease in fair value of CMBS investments, (ii) a $7.6 million increase in earnings from unconsolidated entities and (iii) a $7.3 million favorable change in fair value of servicing rights, partially offset by (iv) the nonrecurrence of an $8.3 million gain on sale of an operating property in the nine months of 2024.
Corporate and Other Items
Corporate Costs and Expenses
For the nine months ended September 30, 2025, corporate expenses increased $38.4 million to $352.8 million, compared to $314.4 million for the nine months ended September 30, 2024. This increase was primarily due to (i) a $36.1 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 $2.4 million increase in general and administrative expenses.
Corporate Other Income
For the nine months ended September 30, 2025, corporate other income increased $36.0 million to $41.7 million, compared to $5.7 million for the nine months ended September 30, 2024. This was due to an increased gain 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, 2025 to the three months ended June 30, 2025 for a discussion of the effect of securitization VIE eliminations.
Income Tax 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, 2025, our income tax provision decreased $9.7 million to $17.8 million, compared to $27.5 million for the nine months ended September 30, 2024. This decrease was due to lower taxable income of our TRSs in the nine months of 2025 compared to the nine months of 2024.
Net Income Attributable to Non-controlling Interests
For the nine months ended September 30, 2025, net income attributable to non-controlling interests increased $14.6 million to $16.1 million, compared to $1.5 million for the nine months ended September 30, 2024. The increase was primarily due to non-controlling interests in lower unrealized losses of a consolidated CMBS joint venture.
Non-GAAP Financial Measures
Distributable Earnings is a non-GAAP financial measure. 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.
Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be considered as an alternative 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 may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings 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 for purposes of determining Distributable Earnings 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 calculation reconciled to our diluted weighted average shares used in our Distributable EPS calculation (amounts in thousands):
For the Three Months Ended
For the Nine Months Ended
September 30, 2025 June 30, 2025
September 30, 2025
September 30, 2024
Diluted weighted average shares - GAAP EPS 360,394 337,145 344,299 315,302
Add: Unvested stock awards 5,572 5,119 5,052 3,925
Add: Woodstar II Class A Units 9,643 9,643 9,664 9,707
Diluted weighted average shares - Distributable EPS 375,609 351,907 359,015 328,934
As noted above, the definition of Distributable Earnings provides flexibility for management to make additional 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. As a result of the Fundamental acquisition, we expect that straight-line rent will become a more significant component of our GAAP net income. Given that straight-line rent does not reflect the timing of cash received pursuant to the applicable leases and is not consistent with the determination of taxable income, we are adding an adjustment for straight line rents in the computation of Distributable Earnings. This adjustment was unanimously approved by our independent directors.
The following table summarizes our quarterly Distributable Earnings per weighted average diluted share for the nine months ended September 30, 2025 and 2024:
Distributable Earnings For the Three-Month Periods Ended
March 31, June 30, September 30,
2025
$ 0.45 $ 0.43 $ 0.40
2024
0.59 0.48 0.48
Distributable Earnings per weighted average diluted share for the nine months ended September 30, 2025 does 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 for the three months ended September 30, 2025, by business segment (amounts in thousands, except per share data). Refer to the footnotes following the Distributable Earnings reconciliation table for the nine months ended September 30, 2024.
Commercial
and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Total
Revenues $ 343,126 $ 77,718 $ 46,196 $ 60,888 $ 693 $ 528,621
Costs and expenses (231,441) (48,337) (58,309) (33,909) (117,655) (489,651)
Other income (loss)
42,630 (497) (8,256) 22,219 (1,793) 54,303
Income (loss) before income taxes 154,315 28,884 (20,369) 49,198 (118,755) 93,273
Income tax (provision) benefit
(7,432) 234 6 (6,151) - (13,343)
Income attributable to non-controlling interests
(3) - (4,366) (3,001) - (7,370)
Net income (loss) attributable to Starwood Property Trust, Inc. 146,880 29,118 (24,729) 40,046 (118,755) 72,560
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,629 - - 4,629
Non-controlling interests attributable to unrealized gains/losses - - (4,323) 824 - (3,499)
Non-cash equity compensation expense 2,840 733 1,565 1,327 8,225 14,690
Depreciation and amortization 2,876 - 21,587 1,865 - 26,328
Straight-line rent adjustment
- - (467) 38 - (429)
Interest income adjustment for loans and securities
5,795 - - 9,261 - 15,056
Consolidated income tax provision (benefit) associated with fair value adjustments
7,432 (234) (6) 6,151 - 13,343
Other non-cash items 2 - (83) (407) - (488)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (40,544) - - (11,823) - (52,367)
Credit loss provision, net
26,805 1,554 - - - 28,359
Securities (1,111) - - (4,531) - (5,642)
Woodstar Fund investments - - (324) - - (324)
Derivatives (14,276) (7) 7,971 (1,295) 1,793 (5,814)
Foreign currency 11,995 210 10 - - 12,215
Loss (earnings) from unconsolidated entities
- 294 - (2,797) - (2,503)
Sales of properties (1,095) - 21 - - (1,074)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(674) - - 14,115 - 13,441
Securities (4)
(414) - - (8,326) - (8,740)
Woodstar Fund investments (5)
- - 21,351 - - 21,351
Derivatives (6)
11,072 46 486 (1,111) (7,499) 2,994
Foreign currency (7)
290 27 (11) - - 306
(Loss) earnings from unconsolidated entities (8)
- (110) - 3,252 - 3,142
Sales of properties (9)
1,095 - (25) - - 1,070
Distributable Earnings (Loss) $ 158,968 $ 31,631 $ 27,652 $ 46,589 $ (116,236) $ 148,604
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.43 $ 0.08 $ 0.08 $ 0.12 $ (0.31) $ 0.40
The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended June 30, 2025, by business segment (amounts in thousands, except per share data). Refer to the footnotes following the Distributable Earnings reconciliation table for the nine months ended September 30, 2024.
Commercial
and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Total
Revenues $ 343,907 $ 67,184 $ 16,477 $ 53,785 $ 536 $ 481,889
Costs and expenses (207,310) (48,334) (22,115) (37,725) (115,205) (430,689)
Other income
26,594 1,014 4,340 36,058 16,161 84,167
Income (loss) before income taxes 163,191 19,864 (1,298) 52,118 (98,508) 135,367
Income tax benefit (provision)
5,495 88 - (6,254) - (671)
(Income) loss attributable to non-controlling interests
(4) - (5,326) 448 - (4,882)
Net income (loss) attributable to Starwood Property Trust, Inc. 168,682 19,952 (6,624) 46,312 (98,508) 129,814
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,629 - - 4,629
Non-controlling interests attributable to unrealized gains/losses - - (3,383) (2,699) - (6,082)
Non-cash equity compensation expense 2,844 723 107 1,367 8,389 13,430
Management incentive fee - - - - 183 183
Depreciation and amortization 2,528 - 5,987 1,845 - 10,360
Interest income adjustment for loans and securities 5,832 - - 7,304 - 13,136
Consolidated income tax (benefit) provision associated with fair value adjustments
(5,495) (88) - 6,254 - 671
Other non-cash items 5 - 316 (380) - (59)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (8,425) - - (21,442) - (29,867)
Credit loss provision, net
3,663 2,003 - - - 5,666
Securities 2,058 - - (3,728) - (1,670)
Woodstar Fund investments - - (5,115) - - (5,115)
Derivatives 116,140 - 13 1,304 (16,161) 101,296
Foreign currency (83,257) (630) 126 - - (83,761)
Earnings from unconsolidated entities
(1,412) (1,167) - (5,647) - (8,226)
Sales of properties (4,128) - - - - (4,128)
Recognition of Distributable realized gains /
(losses) on:
Loans (2)
(702) - - 19,165 - 18,463
Securities (4)
(316) - - (4,223) - (4,539)
Woodstar Fund investments (5)
- - 21,600 - - 21,600
Derivatives (6)
17,555 50 (99) 347 (6,868) 10,985
Foreign currency (7)
1,671 91 (125) - - 1,637
Earnings (loss) from unconsolidated entities (8)
1,412 (109) - 5,801 - 7,104
Sales of properties (9)
(44,438) - - - - (44,438)
Distributable Earnings (Loss) $ 174,217 $ 20,825 $ 17,432 $ 51,580 $ (112,965) $ 151,089
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.49 $ 0.06 $ 0.05 $ 0.15 $ (0.32) $ 0.43
Three Months Ended September 30, 2025 Compared to the Three Months Ended June 30, 2025
Commercial and Residential Lending Segment
The Commercial and Residential Lending Segment's Distributable Earnings decreased by $15.2 million, from $174.2 million during the second quarter of 2025 to $159.0 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $349.0 million, costs and expenses were $199.0 million, other income was $9.0 million and there was no income tax provision or benefit.
Revenues, consisting principally of interest income on loans, decreased by $0.8 million in the third quarter of 2025, primarily due to a decrease of $3.2 million in interest income from investment securities, reflecting lower balances due to payoffs, partially offset by an increase in interest income from loans of $2.5 million. The increase in interest income from loans was comprised of a $2.9 million increase from commercial loans, primarily reflecting higher average balances, partially offset by a $0.4 million decrease from residential loans.
Costs and expenses increased by $0.6 million in the third quarter of 2025, primarily due to a $1.1 million increase in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio, reflecting higher average borrowings outstanding.
Other income decreased by $13.8 million in the third quarter of 2025, primarily due to (i) the nonrecurrence of a $20.8 million gain on extinguishment of debt in the second quarter of 2025 primarily related to the sale of a foreclosed property and (ii) a $7.9 million decrease in realized gains on derivatives and foreign currency, partially offset by (iii) a $17.9 million favorable change in gain (loss) on sale of investments and other assets
Infrastructure Lending Segment
The Infrastructure Lending Segment's Distributable Earnings increased by $10.8 million, from $20.8 million during the second quarter of 2025 to $31.6 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $77.7 million, costs and expenses were $46.1 million and other loss was nominal.
Revenues increased by $10.5 million in the third quarter of 2025, primarily due to a $10.8 million increase in interest income from loans, reflecting higher prepayment related income and average loan balances.
Costs and expenses increased by $0.4 million in the third quarter of 2025, primarily due to a $2.3 million increase in interest expense, reflecting higher average borrowings outstanding, partially offset by a $1.9 million decrease in other costs and expenses.
Other loss decreased by $0.7 million in the third quarter of 2025, primarily due to the nonrecurrence of a loss on extinguishment of debt in the second quarter of 2025.
Property Segment
Distributable Earnings by Portfolio (amounts in thousands)
For the Three Months Ended
September 30, 2025 June 30, 2025 Change
Woodstar Fund, net of non-controlling interests $ 17,687 $ 17,528 $ 159
Fundamental
10,164 - 10,164
Medical Office Portfolio 1,792 1,679 113
D.C. Multifamily Conversion
(845) (635) (210)
Other/Corporate (1,146) (1,140) (6)
Distributable Earnings $ 27,652 $ 17,432 $ 10,220
The Property Segment's Distributable Earnings increased by $10.3 million, from $17.4 million during the second quarter of 2025 to $27.7 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $46.1 million, costs and expenses were $35.7 million, other income was $21.4 million and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $4.1 million.
Revenues increased by $29.1 million in the third quarter of 2025, primarily due to the acquisition of Fundamental on July 23, 2025.
Costs and expenses increased by $19.4 million in the third quarter of 2025, primarily due to the acquisition of Fundamental.
Other income increased by $0.6 million in the third quarter of 2025, primarily due to the acquisition of Fundamental.
Income attributable to non-controlling interests in the Woodstar Fund was relatively unchanged in the third quarter of 2025.
Investing and Servicing Segment
The Investing and Servicing Segment's Distributable Earnings decreased by $5.0 million, from $51.6 million during the second quarter of 2025 to $46.6 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $70.2 million, costs and expenses were $31.2 million, other income was $9.7 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $2.1 million.
Revenues increased by $9.0 million in the third quarter of 2025, primarily due to a $9.7 million increase in servicing fees principally related to default interest and consent fees.
Costs and expenses decreased by $3.8 million in the third quarter of 2025, primarily due to a $2.5 million decrease in general and administrative expenses, principally related to decreased loan securitization activity, and a $1.0 million decrease in interest expense primarily related to the financing of conduit loan balances.
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 $17.9 million in the third quarter of 2025, primarily due to (i) a $5.0 million decrease in realized gains on conduit loans, (ii) a $4.0 million increase in recognized credit losses on CMBS investments, (iii) a $3.5 million unfavorable change in other income (loss), (iv) a $2.5 million decrease in earnings from unconsolidated entities and (v) a $1.5 million unfavorable change in realized gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.
Income attributable to non-controlling interests decreased $0.1 million in the third quarter of 2025.
Corporate
Corporate loss increased by $3.2 million, from $113.0 million during the second quarter of 2025 to $116.2 million in the third quarter of 2025, primarily due to increases of $1.6 million in management fees and $1.0 million in interest expense.
The following table presents our summarized results of operations and reconciliation to Distributable Earnings 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 (4)
(761) - - (15,082) - (15,843)
Woodstar Fund investments (5)
- - 63,272 - - 63,272
Derivatives(6)
57,668 149 290 (1,788) (21,401) 34,918
Foreign currency (7)
2,347 85 (197) - - 2,235
Earnings (loss) from unconsolidated entities (8)
2,708 (327) - 9,659 - 12,040
Sales of properties (9)
(43,343) - (25) - - (43,368)
Distributable Earnings (Loss) $ 511,987 $ 72,488 $ 61,352 $ 147,769 $ (337,607) $ 455,989
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 1.43 $ 0.20 $ 0.17 $ 0.41 $ (0.94) $ 1.27
The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the nine months ended September 30, 2024, 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 $ 1,209,615 $ 197,607 $ 53,437 $ 149,959 $ 1,951 $ 1,612,569
Costs and expenses (870,386) (132,054) (74,065) (112,762) (314,418) (1,503,685)
Other income (loss) 137,123 (736) 100,326 (14,027) 5,718 228,404
Income (loss) before income taxes 476,352 64,817 79,698 23,170 (306,749) 337,288
Income tax (provision) benefit
(18,930) 414 - (9,017) - (27,533)
(Income) loss attributable to non-controlling interests
(10) - (15,010) 13,555 - (1,465)
Net income (loss) attributable to Starwood Property Trust, Inc. 457,412 65,231 64,688 27,708 (306,749) 308,290
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 13,978 - - 13,978
Non-controlling interests attributable to unrealized gains/losses - - (9,028) (25,498) - (34,526)
Non-cash equity compensation expense 7,320 1,485 288 4,797 17,612 31,502
Management incentive fee - - - - 22,593 22,593
Depreciation and amortization 6,793 15 17,955 5,570 - 30,333
Interest income adjustment for securities 15,891 - - 25,603 - 41,494
Consolidated income tax provision (benefit) associated with fair value adjustments
18,930 (414) - 9,017 - 27,533
Other non-cash items 10 - 834 (823) - 21
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (102,781) - - (47,498) - (150,279)
Credit loss provision, net
142,993 1,982 - - - 144,975
Securities 4,352 - - 69,445 - 73,797
Woodstar Fund investments - - (10,304) - - (10,304)
Derivatives (11,636) (59) (1,442) (129) (5,718) (18,984)
Foreign currency (23,970) (479) 13 - - (24,436)
(Earnings) loss from unconsolidated entities
(10,293) 694 - (1,046) - (10,645)
Sales of properties - - (92,003) (8,316) - (100,319)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(4,949) - - 47,261 - 42,312
Realized credit loss(3)
- (1,546) - - - (1,546)
Securities (4)
(9,302) - - (37,078) - (46,380)
Woodstar Fund investments(5)
- - 54,246 - - 54,246
Derivatives (6)
101,184 269 8,694 1,019 (31,750) 79,416
Foreign currency (7)
(12,209) 55 (13) - - (12,167)
Earnings (loss) from unconsolidated entities (8)
4,272 (326) - 1,033 - 4,979
Sales of properties (9)
- - 39,150 3,237 - 42,387
Distributable Earnings (Loss) $ 584,017 $ 66,907 $ 87,056 $ 74,302 $ (304,012) $ 508,270
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 1.78 $ 0.20 $ 0.26 $ 0.23 $ (0.92) $ 1.55
______________________________________________________________________________________________________________________
(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 loan losses that are deemed nonrecoverable, which is generally upon a realization event, such as when a loan is repaid, or in the case of foreclosure, when the underlying asset is sold. Non-recoverability may also be determined if, in our determination, it is nearly certain that the carrying amounts will not be collected or realized upon sale. The loss amount is calculated as the difference between the cash received or expected to be received and the Distributable Earnings basis of the asset.
(4)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.
(5)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.
(6)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.
(7)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.
(8)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.
(9)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.
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Commercial and Residential Lending Segment
The Commercial and Residential Lending Segment's Distributable Earnings decreased by $72.0 million, from $584.0 million during the nine months of 2024 to $512.0 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $1.0 billion, costs and expenses were $580.4 million, other income was $61.7 million and there was no income tax provision or benefit.
Revenues, consisting principally of interest income on loans, decreased by $195.4 million in the nine months of 2025, primarily due to decreases in interest income from loans of $178.2 million and investment securities of $29.4 million, partially offset by an $8.9 million increase in rental income from foreclosed properties. The decrease in interest income from loans reflects (i) a $171.4 million decrease from commercial loans, reflecting lower average index rates and spreads, additional loans placed on nonaccrual, lower prepayment related income and lower average balances, and (ii) a $6.8 million decrease from residential loans principally due to lower average balances. The decrease in interest income from investment securities was primarily due to lower average commercial investment balances due to repayments.
Costs and expenses decreased by $133.4 million in the nine months of 2025, primarily due to a $134.4 million decrease in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio, reflecting lower average borrowings outstanding due to paydowns from net loan repayments and excess cash balances and the effect of lower average index rates.
Other income decreased by $10.0 million in the nine months of 2025, primarily due to (i) a $29.0 million decrease in realized gains on derivative financial instruments, net of related foreign currency gains (losses) and (ii) a $15.9 million net loss on sale of investments and other assets, partially offset by (iii) a $20.6 million increased gain on extinguishment of debt primarily related to the sale of a foreclosed property in the nine months of 2025, (iv) a $12.2 million decrease in recognized credit losses on RMBS investments and residential loans and (v) a $3.8 million decrease in other loss.
Infrastructure Lending Segment
The Infrastructure Lending Segment's Distributable Earnings increased by $5.6 million, from $66.9 million during the nine months of 2024 to $72.5 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $206.5 million, costs and expenses were $133.1 million and other loss was $0.9 million.
Revenues increased by $8.9 million in the nine months of 2025, primarily due to an $8.6 million increase in interest income from loans, reflecting higher average balances and prepayment related income, partially offset by the effects of lower average index rates and spreads.
Costs and expenses increased by $3.0 million in the nine months of 2025, primarily due to (i) a $4.1 million increase in general, administrative and other expenses and (ii) a $0.4 million increase in interest expense, reflecting higher average borrowings outstanding, partially offset by lower average index rates, partially offset by (ii) the nonrecurrence of a $1.5 million recognized credit loss in the nine months of 2024.
Other loss increased by $0.3 million in the nine months of 2025.
Property Segment
Distributable Earnings by Portfolio (amounts in thousands)
For the Nine Months Ended September 30,
2025 2024 Change
Woodstar Fund, net of non-controlling interests $ 51,673 $ 44,239 $ 7,434
Fundamental
10,164 - 10,164
Master Lease Portfolio - 40,714 (40,714)
Medical Office Portfolio 5,272 6,119 (847)
D.C. Multifamily Conversion
(2,308) - (2,308)
Other/Corporate (3,449) (4,016) 567
Distributable Earnings $ 61,352 $ 87,056 $ (25,704)
The Property Segment's Distributable Earnings decreased by $25.7 million, from $87.1 million during the nine months of 2024 to $61.4 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $80.1 million, costs and expenses were $68.4 million, other income was $61.6 million and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $11.9 million.
Revenues increased by $25.4 million in the nine months of 2025, primarily due to the acquisition of Fundamental on July 23, 2025, the effect of which was partially offset by the sale of our Master Lease Portfolio on February 29, 2024.
Costs and expenses increased by $6.6 million in the nine months of 2025, primarily due to (i) the acquisition of Fundamental on July 23, 2025, the effect of which was partially offset by (ii) an $11.4 million decrease in interest expense on variable rate borrowings of the Medical Office Portfolio, reflecting lower refinanced balances and index rates, and (iii) the sale of our Master Lease Portfolio on February 29, 2024.
Other income decreased by $42.6 million in the nine months of 2025, primarily due to the nonrecurrence of a $37.4 million net gain on sale of our Master Lease Portfolio and $14.2 million of realized gains on derivatives which primarily hedged our interest rate risk on borrowings secured by our Medical Office Portfolio, both of which were in the nine months of 2024, partially offset by a $9.0 million increase in distributable income from the Woodstar Fund.
Income attributable to non-controlling interests in the Woodstar Fund increased $1.9 million in the second half of 2025.
Investing and Servicing Segment
The Investing and Servicing Segment's Distributable Earnings increased by $73.5 million from $74.3 million during the nine months of 2024 to $147.8 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $205.6 million, costs and expenses were $99.1 million, other income was $49.0 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $7.7 million.
Revenues increased by $29.8 million in the nine months of 2025, primarily due to a $20.3 million increase in servicing fees principally related to default interest and an $8.7 million increase in interest income from CMBS investments, primarily due to higher interest recoveries. 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 $4.4 million in the nine months of 2025, primarily due to a $4.2 million decrease in interest expense principally related to the financing of conduit loan balances .
Other income increased by $35.1 million in the nine months of 2025, primarily due to (i) a $23.4 million decrease in recognized credit losses on CMBS, (ii) an $8.6 million increase in earnings from unconsolidated entities and (iii) a $7.3 million favorable change in fair value of servicing rights, partially offset by (iv) the nonrecurrence of $4.6 million of gains on sale of an operating property and certain CMBS investments in the nine months of 2024.
Income attributable to non-controlling interests decreased $4.2 million in the nine months of 2025, primarily due to the nonrecurrence of $2.9 million of non-controlling interests in the gain on sale of an operating property in the nine months of 2024.
Corporate
Corporate loss increased by $33.6 million, from $304.0 million during the nine months of 2024 to $337.6 million in the nine months of 2025, primarily due to (i) a $36.1 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 $5.5 million increase in management fees, partially offset by (iii) a $10.3 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, 2024. 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, 2025 (amounts in thousands)
GAAP VIE
Adjustments 		Excluding Securitization VIEs
Net cash provided by operating activities
$ 489,102 $ - $ 489,102
Cash Flows from Investing Activities:
Origination, purchase and funding of loans held-for-investment (6,069,288) - (6,069,288)
Proceeds from principal collections and sale of loans
3,500,561 - 3,500,561
Purchase and funding of investment securities (29,933) (61,638) (91,571)
Proceeds from sales, redemptions and collections of investment securities 308,444 104,338 412,782
Proceeds from sales of real estate 60,480 - 60,480
Proceeds from sale of interest in an unconsolidated entity 69,819 - 69,819
Net cash paid in merger
(878,493) - (878,493)
Purchases and additions to properties and other assets (63,372) - (63,372)
Net cash flows from other investments and assets 23,681 (11) 23,670
Net cash used in investing activities
(3,078,101) 42,689 (3,035,412)
Cash Flows from Financing Activities:
Proceeds from borrowings 9,994,652 - 9,994,652
Principal repayments on and repurchases of borrowings (7,419,083) (331) (7,419,414)
Payment of deferred financing costs (57,326) - (57,326)
Net proceeds from issuances of common stock 567,265 - 567,265
Payment of dividends (490,645) - (490,645)
Contributions from non-controlling interests 1,489 - 1,489
Distributions to non-controlling interests (64,837) - (64,837)
Repayment of debt of consolidated VIEs (61,980) 61,980 -
Distributions of cash from consolidated VIEs 104,338 (104,338) -
Net cash provided by financing activities
2,573,873 (42,689) 2,531,184
Net decrease in cash, cash equivalents and restricted cash
(15,126) - (15,126)
Cash, cash equivalents and restricted cash, beginning of period 553,995 - 553,995
Effect of exchange rate changes on cash 238 - 238
Cash, cash equivalents and restricted cash, end of period $ 539,107 $ - $ 539,107
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 decreased by $15.1 million during the nine months ended September 30, 2025, reflecting net cash used in investing activities of $3.0 billion, offset by net cash provided by financing activities of $2.5 billion and net cash provided by operating activities of $489.1 million.
Net cash provided by operating activities of $489.1 million during the nine months ended September 30, 2025 related primarily to cash interest income of $1.0 billion from our loans and $118.6 million from our investment securities. Other cash inflows included distributions from our affordable housing fund investments of $221.0 million (including $178.0 million of excess proceeds from mortgage debt refinancing), sales and principal collections, net of originations and purchases of loans held-for-sale of $83.6 million, net rental income of $70.6 million, servicing fees of $69.5 million and receipts from our interest rate derivatives of $21.8 million. Offsetting these cash inflows was cash interest expense of $870.6 million and general and administrative expenses of $236.5 million.
Net cash used in investing activities of $3.0 billion for the nine months ended September 30, 2025 related primarily to the origination and acquisition of loans held-for-investment of $6.1 billion, net cash paid in Fundamental merger of $878.5 million, purchase and funding of investment securities of $91.6 million and purchases and additions to properties and other assets of $63.4 million. Offsetting these cash outflows was proceeds received from principal collections and sale of loans held-for-investment of $3.5 billion and investment securities of $412.8 million, proceeds from the sale of an interest in an unconsolidated entity of $69.8 million and proceeds from the sale of real estate of $60.5 million.
Net cash provided by financing activities of $2.5 billion for the nine months ended September 30, 2025 related primarily to borrowings on our debt, net of repayments and deferred loan costs, of $2.5 billion and proceeds from issuances of common stock of $567.3 million. Offsetting these cash inflows was dividend distributions of $490.6 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, 2025 and December 31, 2024 (dollars in thousands):
Face
Amount 		Carrying
Value 		Asset Specific
Financing 		Net
Investment 		Unlevered
Return on
Asset (6)
September 30, 2025
First mortgages (1) $ 15,336,397 $ 15,282,765 $ 9,050,754 $ 6,232,011 7.9 %
Subordinated mortgages (2) 32,411 32,803 - 32,803 14.7 %
Mezzanine loans (1) 309,648 306,864 - 306,864 11.4 %
Other loans 51,688 51,093 - 51,093 9.3 %
Loans held-for-sale, fair value option, residential 2,516,397 2,308,388 2,061,331 247,057 4.4 % (5)
RMBS, available-for-sale 174,594 89,474 38,827 50,647 10.3 %
RMBS, fair value option 326,274 408,823 (3) 153,569 255,254 17.2 %
HTM debt securities (4) 143,728 143,458 36,243 107,215 6.5 %
Credit loss allowance N/A (440,182) - (440,182)
Equity security 2,489 2,166 - 2,166
Investments in unconsolidated entities N/A 8,514 - 8,514
Properties, net N/A 764,063 29,751 734,312
$ 18,893,626 $ 18,958,229 $ 11,370,475 $ 7,587,754
December 31, 2024
First mortgages (1) $ 12,955,038 $ 12,931,333 $ 7,371,711 $ 5,559,622 8.3 %
Subordinated mortgages (2) 31,000 31,247 - 31,247 15.4 %
Mezzanine loans (1) 324,021 323,041 - 323,041 11.3 %
Other loans 46,688 46,255 - 46,255 13.2 %
Loans held-for-sale, fair value option, residential 2,694,959 2,394,624 2,125,990 268,634 4.5 % (5)
RMBS, available-for-sale 180,654 93,806 17,248 76,558 10.4 %
RMBS, fair value option 326,274 421,122 (3) 154,870 266,252 18.5 %
HTM debt securities (4) 405,404 404,081 121,832 282,249 8.9 %
Credit loss allowance N/A (451,205) - (451,205)
Equity security 5,606 5,146 - 5,146
Investments in unconsolidated entities N/A 26,441 - 26,441
Properties, net N/A 650,966 87,750 563,216
$ 16,969,644 $ 16,876,857 $ 9,879,401 $ 6,997,456
__________________________________________
(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 $1.3 billion and $0.9 billion being classified as first mortgages as of September 30, 2025 and December 31, 2024, 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.
(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, 2025 and December 31, 2024, 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, 2025 December 31, 2024
Multifamily 37.0 % 34.5 %
Office 19.2 % 22.0 %
Industrial 16.3 % 8.9 %
Hotel 9.1 % 12.1 %
Mixed Use 4.7 % 9.6 %
Residential 2.6 % 1.6 %
Retail 2.1 % 1.6 %
Other 9.0 % 9.7 %
100.0 % 100.0 %
Geographic Location September 30, 2025 December 31, 2024
U.S. Regions:
South West 19.9 % 15.4 %
North East 19.9 % 18.4 %
South East 13.4 % 15.8 %
West 12.4 % 10.5 %
Mid Atlantic 5.6 % 9.3 %
Midwest 2.6 % 2.2 %
International:
United Kingdom 9.4 % 12.8 %
Other Europe 9.6 % 6.3 %
Australia 6.8 % 7.3 %
Bahamas/Bermuda 0.4 % 2.0 %
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, 2025 and December 31, 2024 (dollars in thousands):
Face
Amount 		Carrying
Value 		Asset Specific
Financing 		Net
Investment 		Unlevered
Return on
Asset (1)
September 30, 2025
First priority infrastructure loans and HTM securities $ 3,169,008 $ 3,105,760 $ 2,333,142 $ 772,618 8.4 %
Credit loss allowance N/A (25,381) - (25,381)
Investments in unconsolidated entities N/A 54,356 - 54,356
$ 3,169,008 $ 3,134,735 $ 2,333,142 $ 801,593
December 31, 2024
First priority infrastructure loans and HTM securities $ 2,631,732 $ 2,580,775 $ 1,989,860 $ 590,915 8.9 %
Credit loss allowance N/A (21,553) - (21,553)
Investments in unconsolidated entities N/A 54,105 - 54,105
$ 2,631,732 $ 2,613,327 $ 1,989,860 $ 623,467
__________________________________________
(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, 2025 and December 31, 2024, our Infrastructure Lending Segment's investment portfolio had the following characteristics based on carrying values:
Collateral Type September 30, 2025 December 31, 2024
Power
62.1 % 57.1 %
Oil & gas - midstream 24.8 % 33.5 %
Oil & gas - downstream 10.4 % 8.5 %
Oil & gas - upstream
- % 0.9 %
Other
2.7 % - %
100.0 % 100.0 %
Geographic Location September 30, 2025 December 31, 2024
U.S. Regions:
North East 30.9 % 31.7 %
South West 22.7 % 20.5 %
Midwest 20.6 % 20.1 %
West 11.5 % 5.8 %
South East 10.0 % 17.0 %
Mid-Atlantic 0.8 % 1.4 %
Other 1.0 % 1.3 %
International:
United Kingdom
1.6 % 1.9 %
Canada
0.7 % - %
Mexico 0.2 % 0.3 %
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, 2025 and December 31, 2024 (amounts in thousands):
September 30, 2025 December 31, 2024
Properties, net $ 2,505,635 $ 657,246
Lease intangibles, net 361,517 21,415
Woodstar Fund 1,861,931 2,073,533
$ 4,729,083 $ 2,752,194
The following table sets forth our net investment and other information regarding the Property Segment's properties and lease intangibles as of September 30, 2025 (dollars in thousands):
Carrying
Value 		Asset
Specific
Financing 		Net
Investment
Occupancy
Rate (1)
Weighted Average
Remaining
Lease Term
Fundamental
$ 2,215,960 $ 1,292,474 $ 923,486 99.8% 17.1 years
Office-Medical Office Portfolio
789,757 481,502 308,255 88.0% 5.6 years
D.C. Multifamily Conversion
117,050 - 117,050 N/A N/A
Subtotal-undepreciated carrying value 3,122,767 1,773,976 1,348,791
Accumulated depreciation and amortization (255,615) - (255,615)
Net carrying value $ 2,867,152 $ 1,773,976 $ 1,093,176
__________________________________________
(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, 2025 and December 31, 2024, our Property Segment's investment portfolio had the following geographic characteristics based on carrying values:
Geographic Location September 30, 2025 December 31, 2024
U.S. Regions:
South East 59.2 % 85.3 %
Midwest 13.4 % 2.2 %
West 8.3 % 2.5 %
North East 8.3 % 4.2 %
South West 6.1 % 2.9 %
Mid-Atlantic 4.5 % 2.9 %
International:
Canada
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, 2025 and December 31, 2024 (amounts in thousands):
Face
Amount 		Carrying
Value 		Asset
Specific
Financing 		Net
Investment
September 30, 2025
CMBS, fair value option $ 2,737,089 $ 1,197,170 (1) $ 440,908 (2) $ 756,262
Intangible assets - servicing rights N/A 63,916 (3) - 63,916
Lease intangibles, net N/A 4,734 - 4,734
Loans held-for-sale, fair value option, commercial 253,250 252,767 - 252,767
Investments in unconsolidated entities N/A 32,964 (4) - 32,964
Properties, net N/A 64,785 57,752 7,033
$ 2,990,339 $ 1,616,336 $ 498,660 $ 1,117,676
December 31, 2024
CMBS, fair value option $ 2,822,153 $ 1,225,024 (1) $ 445,966 (2) $ 779,058
Intangible assets - servicing rights N/A 58,135 (3) - 58,135
Lease intangibles, net N/A 5,545 - 5,545
Loans held-for-sale, fair value option, commercial 125,695 121,384 86,753 34,631
Investments in unconsolidated entities N/A 33,640 (4) - 33,640
Properties, net N/A 65,466 58,375 7,091
$ 2,947,848 $ 1,509,194 $ 591,094 $ 918,100
______________________________________________
(1)Includes $1.17 billion and $1.20 billion of CMBS eliminated in consolidation against VIE liabilities pursuant to ASC 810 as of September 30, 2025 and December 31, 2024, respectively. Also includes $140.1 million and $148.6 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of September 30, 2025 and December 31, 2024, respectively.
(2)Includes $26.7 million and $30.3 million of non-controlling interests in the consolidated entities which hold certain debt balances as of September 30, 2025 and December 31, 2024, respectively.
(3)Includes $36.4 million and $35.7 million of servicing rights intangibles eliminated in consolidation against VIE assets pursuant to ASC 810 as of September 30, 2025 and December 31, 2024, respectively.
(4)Includes $14.7 million and $14.8 million of investments in unconsolidated entities eliminated in consolidation against VIE assets pursuant to ASC 810 as of September 30, 2025 and December 31, 2024, respectively.
Secured Borrowings
The following table is a summary of our secured borrowings as of September 30, 2025 (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 2025 to May 2031
(d)
Oct 2028 to Dec 2033
(d)
Index + 1.90%
(e)
$ 11,792,848 $ 11,638,378
(f)
$ 7,258,133 $ 983,942 $ 3,396,303
Residential Loans Mar 2026 to Oct 2027 Mar 2026 to Apr 2028
SOFR + 1.65%
2,305,757 3,450,000 2,061,738 4,853 1,383,409
Infrastructure Loans Sep 2027 Sep 2029
Index + 2.20%
426,353 650,000 326,743 - 323,257
Conduit Loans Dec 2025 to Jun 2028 Dec 2026 to Jun 2029
SOFR + 2.15%
- 375,000 - - 375,000
CMBS/RMBS Dec 2025 to Apr 2032
(g)
Dec 2025 to Oct 2032
(g)
(h) 1,215,230 906,650 645,886
(i)
62,171 198,593
Total Repurchase Agreements 15,740,188 17,020,028 10,292,500 1,050,966 5,676,562
Other Secured Financing:
Borrowing Base Facility Oct 2027 Oct 2029
SOFR + 2.00%
267,632 1,250,000
(j)
8,000 194,968 1,047,032
Commercial Financing Facilities Jan 2026 to Apr 2030 Jan 2027 to Dec 2033
Index + 1.97%
687,866 977,423
(k)
477,187 - 500,236
Infrastructure Financing Facilities Oct 2025 to Aug 2028 Oct 2027 to Jul 2033
SOFR + 1.87%
997,100 1,175,000 773,710 65,877 335,413
Property Financing
Dec 2025 to Dec 2026 Dec 2025 to May 2029 (l) 1,304,254 1,130,240 942,397 - 187,843
Term Loans and Revolver Nov 2027 to Sep 2032 N/A
SOFR + 2.00%
N/A
(m)
2,475,879 2,275,879 200,000 -
STWD 2022-FL3 CLO Nov 2038 N/A
SOFR + 1.75%
757,236 594,709 594,709 - -
STWD 2021-HTS SASB Apr 2034 N/A
SOFR + 3.26%
144,227 123,615 123,615 - -
STWD 2021-FL2 CLO Apr 2038 N/A
SOFR + 1.76%
916,701 693,802 693,802 - -
Starwood 2025-SIF5 CLO
Apr 2037 N/A
SOFR + 1.73%
518,977 413,500 413,500 - -
Starwood 2024-SIF4 CLO
Oct 2036 N/A
SOFR + 1.93%
612,678 496,200 496,200 - -
STWD 2024-SIF3 CLO
Apr 2036 N/A
SOFR + 2.18%
408,666 330,000 330,000 - -
ABS Master Series
Mar 2028 to Oct 2029 Mar 2053 to Oct 2054
5.94%
(n)
1,443,462 877,942 877,942 - -
Total Other Secured Financing 8,058,799 10,538,310 8,006,941 460,845 2,070,524
$ 23,798,987 $ 27,558,338 $ 18,299,441 $ 1,511,811 $ 7,747,086
Unamortized net discount (20,671)
Unamortized deferred financing costs (93,064)
$ 18,185,706
___________________________________________
(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.
(e)Certain facilities with an outstanding balance of $2.5 billion as of September 30, 2025 are indexed to EURIBOR, BBSY, SARON and SONIA. The remainder are indexed to SOFR.
(f)Certain facilities with an aggregate initial maximum facility size of $11.2 billion may be increased to $11.6 billion, subject to certain conditions. The $11.6 billion amount includes such upsizes.
(g)Certain facilities with an outstanding balance of $229.4 million as of September 30, 2025 carry a rolling 12-month term which may reset quarterly with the lender's consent. These facilities carry no maximum facility size.
(h)A facility with an outstanding balance of $320.8 million as of September 30, 2025 has a weighted average fixed annual interest rate of 3.96%. All other facilities are variable rate with a weighted average rate of SOFR + 1.83%.
(i)Includes: (i) $320.8 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $26.7 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, 2025 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 $877.4 million may be increased to $977.4 million, subject to certain conditions. The $977.4 million amount includes such upsizes.
(l)Certain facilities with an outstanding balance of $20.0 million as of September 30, 2025 have a weighted average fixed annual interest rate of 4.51%. All other facilities are variable rate with a weighted average rate of SOFR + 2.51%. Of the total balance, $414.6 million relates to Fundamental.
(m)These facilities are secured by the equity interests in certain of our subsidiaries which totaled $8.0 billion as of September 30, 2025.
(n)Includes: (i) $240.5 million outstanding under ABS Series 2024-1 with a weighted average fixed rate of 5.03%; (ii) $313.4 million outstanding under ABS Series 2023-2 with a weighted average fixed rate of 5.89% and (iii) $324.1 million outstanding under ABS Series 2023-1 with a weighted average fixed rate of 6.65%.
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, 2024.
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, 2024 14,440,425 14,767,193 (326,768)
March 31, 2025 15,701,971 14,882,903 819,068
(a)
June 30, 2025 16,416,814 16,037,485 379,329
September 30, 2025 18,299,441 17,404,418 895,023
(b)
__________________________________________________
(a)Variance primarily due to secured debt advances utilized to fund new commercial loan originations at quarter end.
(b)Variance primarily due to debt assumed and drawn in connection with the Fundamental acquisition as well as issuance of corporate term loan at quarter end.
Borrowings under Unsecured Senior Notes
During the three months ended September 30, 2025 and 2024, the weighted average effective borrowing rate on our unsecured senior notes was 6.3% and 5.6%, respectively. During the nine months ended September 30, 2025 and 2024, the weighted average effective borrowing rate on our unsecured senior notes was 6.2% and 5.4%, 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, 2025. The projected and/or required repayments of financing were based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):
Scheduled Principal
Repayments on Loans
and HTM Securities 		Scheduled/Projected
Principal Repayments
on RMBS and CMBS
Projected/Required
Repayments of
Financing
Scheduled Principal
Inflows Net of
Financing Outflows
Fourth Quarter 2025 $ 933,292 $ 56,581 $ (550,606) $ 439,267
First Quarter 2026 432,554 8,052 (389,948) 50,658
Second Quarter 2026 868,218 63,286 (552,259) 379,245
Third Quarter 2026 813,768 30,630 (1,801,728) (957,330) (1)
Total $ 3,047,832 $ 158,549 $ (3,294,541) $ (88,160)
______________________________________________________________________________________________________________________
(1)Shortfall primarily relates to (i) $521.8 million of repayments under a Residential Loans repurchase facility which we have historically extended and intend to extend with lender's consent and (ii) $400.0 million of our unsecured senior notes that mature in July 2026 that we intend to repay with funds generated in the normal course of business.
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, 2025, we had 100,000,000 shares of preferred stock available for issuance and 129,683,551 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.
Leverage Policies
Our strategies with regards to use of leverage have not changed significantly since December 31, 2024. 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, 2025 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) $ 14,769,673 $ 936,827 $ 3,019,678 $ 6,448,790 $ 4,364,378
Securitized financing (b)
3,529,768 963,463 769,319 545,378 1,251,608
Unsecured senior notes 3,280,750 400,000 880,750 1,500,000 500,000
Future funding commitments:
Commercial Lending (c) 1,474,096 913,775 538,741 21,580 -
Infrastructure Lending (d) 449,415 368,553 80,862 - -
Property Segment (e)
53,277 43,079 10,198 - -
__________________________________________________
(a)Represents the contractual maturity of the respective credit facility, inclusive of available extension options. If investments that have been pledged as collateral repay earlier than the contractual maturity of the debt, the related portion of the debt would likewise require earlier repayment. 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 $199.7 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 $231.0 million under revolvers and letters of credit, $167.9 million under delayed draw term loans and $50.5 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 2025 and August 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 loan commitments are expected to be primarily matched-term funded under secured financing agreements 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, 2024.
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 10, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 10, 2025 at 11:59 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]