Starwood Property Trust Inc.

05/08/2024 | Press release | Distributed by Public on 05/08/2024 05:00

Quarterly Report for Quarter Ending March 31, 2024 (Form 10-Q)

stwd-20240331
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-34436
__________________________________________________
Starwood Property Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland 27-0247747
(State or Other Jurisdiction of
Incorporation or Organization) 		(I.R.S. Employer
Identification No.)
591 West Putnam Avenue
Greenwich, Connecticut
06830
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(203) 422-7700
___________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.01 par value per share STWD New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the issuer's common stock, $0.01 par value, outstanding as of May 3, 2024 was 315,962,445.
1
Table of Contents

Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements, including without limitation, statements concerning our operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words "believe," "expect," "anticipate" and other similar expressions. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.
These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to:
•factors described in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q, including those set forth under the captions "Risk Factors", "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations";
•defaults by borrowers in paying debt service on outstanding indebtedness;
•impairment in the value of real estate property securing our loans or in which we invest;
•availability of mortgage origination and acquisition opportunities acceptable to us;
•potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;
•our ability to achieve the benefits that we anticipate from the prior acquisition of the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC;
•national and local economic and business conditions, including as a result of the impact of public health emergencies;
•the occurrence of certain geo-political events (such as wars, terrorist attacks and tensions between states) that affect the normal and peaceful course of international relations;
•general and local commercial and residential real estate property conditions;
•changes in federal government policies;
•changes in federal, state and local governmental laws and regulations;
•increased competition from entities engaged in mortgage lending and securities investing activities;
•changes in interest rates; and
•the availability of, and costs associated with, sources of liquidity.
In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.
2
Table of Contents

TABLE OF CONTENTS
Page
Part I
Financial Information
Item 1.
Financial Statements
4
Condensed Consolidated Balance Sheets
4
Condensed Consolidated Statements of Operations
5
Condensed Consolidated Statements of Comprehensive Income
6
Condensed Consolidated Statements of Equity
7
Condensed Consolidated Statements of Cash Flows
8
Notes to Condensed Consolidated Financial Statements
10
Note 1 Business and Organization
10
Note 2 Summary of Significant Accounting Policies
11
Note 3 Acquisitions and Divestitures
18
Note 4 Loans
19
Note 5 Investment Securities
24
Note 6 Properties
27
Note 7 Investments of Consolidated Affordable Housing Fund
28
Note 8 Investments in Unconsolidated Entities
29
Note 9 Goodwill and Intangibles
30
Note 10 Secured Borrowings
32
Note 11 Unsecured Senior Notes
37
Note 12 Loan Securitization/Sale Activities
39
Note 13 Derivatives and Hedging Activity
40
Note 14 Offsetting Assets and Liabilities
41
Note 15 Variable Interest Entities
41
Note 16 Related-Party Transactions
43
Note 17 Stockholders' Equity and Non-Controlling Interests
45
Note 18 Earnings per Share
47
Note 19 Accumulated Other Comprehensive Income
48
Note 20 Fair Value
49
Note 21 Income Taxes
56
Note 22 Commitments and Contingencies
56
Note 23 Segment Data
58
Note 24 Subsequent Events
62
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
63
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
95
Item 4.
Controls and Procedures
97
Part II
Other Information
Item 1.
Legal Proceedings
98
Item 1A.
Risk Factors
98
Item 2.
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
98
Item 3.
Defaults Upon Senior Securities
98
Item 4.
Mine Safety Disclosures
98
Item 5.
Other Information
98
Item 6.
Exhibits
99
3
Table of Contents

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands, except share data)
As of March 31,
As of December 31,
2024
2023
Assets:
Cash and cash equivalents $ 327,363 $ 194,660
Restricted cash 125,341 117,312
Loans held-for-investment, net of credit loss allowances of $331,646 and $309,039
16,606,862 17,574,249
Loans held-for-sale ($2,642,219 and $2,645,637 held at fair value)
2,689,368 2,645,637
Investment securities, net of credit loss allowances of $17,589 and $13,143 ($127,070 and $129,308 held at fair value)
716,073 735,562
Properties, net 1,044,565 1,046,384
Properties held-for-sale
- 290,937
Investments of consolidated affordable housing fund, at fair value
2,008,937 2,012,833
Investments in unconsolidated entities 96,927 90,376
Goodwill 259,846 259,846
Intangible assets ($19,612 and $19,384 held at fair value)
63,267 64,967
Derivative assets 82,916 63,437
Accrued interest receivable 194,498 200,867
Other assets 319,853 420,773
Variable interest entity ("VIE") assets, at fair value 41,633,853 43,786,356
Total Assets $ 66,169,669 $ 69,504,196
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 259,998 $ 293,442
Related-party payable 44,226 44,816
Dividends payable 153,174 152,888
Derivative liabilities 74,647 102,467
Secured financing agreements, net 12,556,487 13,867,996
Collateralized loan obligations and single asset securitization, net 3,223,867 3,491,292
Unsecured senior notes, net 2,751,666 2,158,888
Debt related to properties held for sale - 193,691
VIE liabilities, at fair value 40,065,423 42,175,734
Total Liabilities 59,129,488 62,481,214
Commitments and contingencies (Note 22)
Temporary Equity: Redeemable non-controlling interests
415,485 414,348
Permanent Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding
- -
Common stock, $0.01 per share, 500,000,000 shares authorized, 323,405,456 issued and 315,956,765 outstanding as of March 31, 2024 and 320,814,765 issued and 313,366,074 outstanding as of December 31, 2023
3,234 3,208
Additional paid-in capital 5,885,852 5,864,670
Treasury stock (7,448,691 shares)
(138,022) (138,022)
Retained earnings 507,622 505,881
Accumulated other comprehensive income 14,061 15,352
Total Starwood Property Trust, Inc. Stockholders' Equity 6,272,747 6,251,089
Non-controlling interests in consolidated subsidiaries 351,949 357,545
Total Permanent Equity 6,624,696 6,608,634
Total Liabilities and Equity $ 66,169,669 $ 69,504,196
________________________________________________________
Note: In addition to the VIE assets and liabilities which are separately presented, our condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 include assets of $4.0 billion and $4.3 billion, respectively, and liabilities of $3.2 billion and $3.5 billion, respectively, related to consolidated collateralized loan obligations ("CLOs") and a single asset securitization ("SASB"), which are considered to be VIEs. The CLOs' and SASB's assets can only be used to settle obligations of the CLOs and SASB, and the CLOs' and SASB's liabilities do not have recourse to Starwood Property Trust, Inc. Refer to Note 15 for additional discussion of VIEs.

See notes to condensed consolidated financial statements.
4
Table of Contents

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share data)
For the Three Months Ended
March 31,
2024 2023
Revenues:
Interest income from loans $ 463,492 $ 430,908
Interest income from investment securities 18,206 18,637
Servicing fees 9,689 7,256
Rental income 28,847 32,289
Other revenues 2,854 1,324
Total revenues 523,088 490,414
Costs and expenses:
Management fees 46,014 39,540
Interest expense 355,956 335,301
General and administrative 50,663 42,108
Costs of rental operations 10,344 11,666
Depreciation and amortization 9,818 12,416
Credit loss provision, net 35,839 43,194
Other expense 674 1,117
Total costs and expenses 509,308 485,342
Other income (loss):
Change in net assets related to consolidated VIEs 10,086 41,138
Change in fair value of servicing rights 228 304
Change in fair value of investment securities, net 915 82
Change in fair value of mortgage loans, net (29,013) 8,901
Income from affordable housing fund investments 9,448 12,965
Earnings from unconsolidated entities
7,675 2,725
Gain on sale of investments and other assets, net 91,962 190
Gain (loss) on derivative financial instruments, net 101,939 (32,828)
Foreign currency (loss) gain, net (41,870) 15,019
Loss on extinguishment of debt (1,454) (61)
Other loss, net (2,630) (2,541)
Total other income 147,286 45,894
Income before income taxes 161,066 50,966
Income tax (provision) benefit
(1,206) 8,795
Net income 159,860 59,761
Net income attributable to non-controlling interests (5,528) (7,787)
Net income attributable to Starwood Property Trust, Inc.
$ 154,332 $ 51,974
Earnings per share data attributable to Starwood Property Trust, Inc.:
Basic $ 0.49 $ 0.16
Diluted $ 0.48 $ 0.16
See notes to condensed consolidated financial statements.
5
Table of Contents

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, amounts in thousands)
For the Three Months Ended
March 31,
2024 2023
Net income $ 159,860 $ 59,761
Other comprehensive income (loss) (net change by component):
Available-for-sale securities (1,291) (1,104)
Other comprehensive loss (1,291) (1,104)
Comprehensive income 158,569 58,657
Less: Comprehensive income attributable to non-controlling interests (5,528) (7,787)
Comprehensive income attributable to Starwood Property Trust, Inc.
$ 153,041 $ 50,870
See notes to condensed consolidated financial statements.
6
Table of Contents

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity
For the Three Months Ended March 31, 2024 and 2023
(Unaudited, amounts in thousands, except share data)
Temporary Equity Common stock Additional
Paid-in
Capital 		Treasury Stock Retained Earnings Accumulated
Other
Comprehensive
Income 		Total
Starwood Property
Trust, Inc.
Stockholders'
Equity 		Non-
Controlling
Interests 		Total Permanent
Equity
Shares Par
Value 		Shares Amount
Balance, December 31, 2023
$ 414,348 320,814,765 $ 3,208 $ 5,864,670 7,448,691 $ (138,022) $ 505,881 $ 15,352 $ 6,251,089 $ 357,545 $ 6,608,634
Proceeds from DRIP Plan - 13,034 - 266 - - - - 266 - 266
Proceeds from employee stock purchase plan - 66,315 1 1,133 - - - - 1,134 - 1,134
Share-based compensation - 2,015,172 20 10,026 - - - - 10,046 - 10,046
Manager fees paid in stock - 496,170 5 9,757 - - - - 9,762 - 9,762
Net income 1,565 - - - - - 154,332 - 154,332 3,963 158,295
Dividends declared, $0.48 per share
- - - - - - (152,591) - (152,591) - (152,591)
Other comprehensive loss, net - - - - - - - (1,291) (1,291) - (1,291)
Distributions to non-controlling interests (428) - - - - - - - - (9,559) (9,559)
Balance, March 31, 2024 $ 415,485 323,405,456 $ 3,234 $ 5,885,852 7,448,691 $ (138,022) $ 507,622 $ 14,061 $ 6,272,747 $ 351,949 $ 6,624,696
Balance, December 31, 2022
$ 362,790 318,123,861 $ 3,181 $ 5,807,087 7,448,691 $ (138,022) $ 769,237 $ 20,955 $ 6,462,438 $ 373,479 $ 6,835,917
Proceeds from DRIP Plan - 15,657 - 299 - - - - 299 - 299
Proceeds from employee stock purchase plan - 65,026 1 969 - - - - 970 - 970
Share-based compensation - 1,091,789 11 10,925 - - - - 10,936 - 10,936
Manager fees paid in stock - 373,204 4 7,229 - - - - 7,233 - 7,233
Net income 2,287 - - - - - 51,974 - 51,974 5,500 57,474
Dividends declared, $0.48 per share
- - - - - - (150,521) - (150,521) - (150,521)
Other comprehensive loss, net - - - - - - - (1,104) (1,104) - (1,104)
Distributions to non-controlling interests (659) - - - - - - - - (8,731) (8,731)
Balance, March 31, 2023 $ 364,418 319,669,537 $ 3,197 $ 5,826,509 7,448,691 $ (138,022) $ 670,690 $ 19,851 $ 6,382,225 $ 370,248 $ 6,752,473
See notes to condensed consolidated financial statements.
7
Table of Contents

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)
For the Three Months Ended
March 31,
2024 2023
Cash Flows from Operating Activities:
Net income $ 159,860 $ 59,761
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of deferred financing costs, premiums and discounts on secured borrowings 12,490 13,205
Amortization of discounts and deferred financing costs on unsecured senior notes 2,300 2,234
Accretion of net discount on investment securities (1,387) (2,094)
Accretion of net deferred loan fees and discounts (19,891) (15,180)
Share-based compensation 10,046 10,936
Manager fees paid in stock 9,762 7,233
Change in fair value of investment securities (915) (82)
Change in fair value of consolidated VIEs 23,769 (4,245)
Change in fair value of servicing rights (228) (304)
Change in fair value of loans 29,013 (8,901)
Change in fair value of affordable housing fund investments 3,896 (1,160)
Change in fair value of derivatives (75,079) 48,431
Foreign currency loss (gain), net
41,870 (15,019)
Gain on sale of investments and other assets (91,962) (190)
Credit loss provision, net
35,839 43,194
Depreciation and amortization 11,049 13,635
Earnings from unconsolidated entities
(7,675) (2,725)
Distributions of earnings from unconsolidated entities 1,125 243
Loss on extinguishment of debt 1,704 61
Origination and purchase of loans held-for-sale, net of principal collections (243,325) (28,333)
Proceeds from sale of loans held-for-sale 218,596 13,439
Changes in operating assets and liabilities:
Related-party payable (590) (1,603)
Accrued and capitalized interest receivable, less purchased interest (15,475) (41,541)
Other assets (9,875) (89,667)
Accounts payable, accrued expenses and other liabilities (38,968) (29,886)
Net cash provided by (used in) operating activities
55,949 (28,558)
Cash Flows from Investing Activities:
Origination, purchase and funding of loans held-for-investment (265,185) (431,615)
Proceeds from principal collections on loans 1,220,995 407,199
Purchase and funding of investment securities (9,220) (591)
Proceeds from sales and redemptions of investment securities 1,314 -
Proceeds from principal collections on investment securities 19,149 40,778
Proceeds from sales of real estate, net of debt assumed by purchaser
188,040 543
Purchases and additions to properties and other assets (5,576) (5,839)
Distribution of capital from unconsolidated entities - 277
Payments for purchase or termination of derivatives (781) (3,340)
Proceeds from termination of derivatives 16,925 5,605
Net cash provided by investing activities
1,165,661 13,017
See notes to condensed consolidated financial statements.
8
Table of Contents

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited, amounts in thousands)
For the Three Months Ended
March 31,
2024 2023
Cash Flows from Financing Activities:
Proceeds from borrowings $ 1,234,980 $ 1,202,077
Principal repayments on and repurchases of borrowings (2,165,427) (892,238)
Payment of deferred financing costs (6,574) (2,924)
Proceeds from common stock issuances 1,400 1,269
Payment of dividends (152,305) (149,765)
Distributions to non-controlling interests (9,987) (9,390)
Issuance of debt of consolidated VIEs 3,166 -
Repayment of debt of consolidated VIEs (108) (108)
Distributions of cash from consolidated VIEs 15,022 15,329
Net cash (used in) provided by financing activities
(1,079,833) 164,250
Net increase in cash, cash equivalents and restricted cash 141,777 148,709
Cash, cash equivalents and restricted cash, beginning of period 311,972 382,133
Effect of exchange rate changes on cash (1,045) 594
Cash, cash equivalents and restricted cash, end of period $ 452,704 $ 531,436
Supplemental disclosure of cash flow information:
Cash paid for interest $ 367,142 $ 322,932
Income taxes (refunded) paid, net
(269) 42
Supplemental disclosure of non-cash investing and financing activities:
Dividends declared, but not yet paid $ 152,591 $ 152,551
Deconsolidation of VIEs (VIE asset/liability reductions) (622,077) -
Debt assumed by purchaser in sale of real estate
(194,900) -
Reclassification of loans held-for-investment to loans held-for-sale 48,695 -
Loan principal collections temporarily held at master servicer 5,305 15,197
See notes to condensed consolidated financial statements.
9
Table of Contents

Starwood Property Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
As of March 31, 2024
(Unaudited)
1. Business and Organization
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 March 31, 2024 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 commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that 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").
We are organized and conduct our operations to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements.
We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our "Manager") pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group Global, L.P., a privately-held private equity firm founded by Mr. Sternlicht.
10
Table of Contents

2. Summary of Significant Accounting Policies
Balance Sheet Presentation of Securitization Variable Interest Entities
We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or "SPEs"). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America ("GAAP"), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity's operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.
Because we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs.
The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, a portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.
Refer to the segment data in Note 23 for a presentation of our business segments without consolidation of these VIEs.
Basis of Accounting and Principles of Consolidation
The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows have been included.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (our "Form 10-K"), as filed with the Securities and Exchange Commission ("SEC"). The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the full year.
Refer to our Form 10-K for a description of our recurring accounting policies. We have included disclosure in this Note 2 regarding principles of consolidation and other accounting policies that (i) are required to be disclosed quarterly, (ii) we view as critical, (iii) became significant since December 31, 2023 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update ("ASU") issued by the Financial Accounting Standards Board ("FASB").
Variable Interest Entities
In addition to the securitization VIEs, we have financed pools of our loans through collateralized loan obligations ("CLOs") and a single asset securitization ("SASB"), which are considered VIEs. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership without cause or (ii) the right to participate in significant decisions made by the partnership.
We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification ("ASC") 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We
11
Table of Contents

consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE.
To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes: (i) identifying the activities that most significantly impact the VIE's economic performance; and (ii) identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE.
To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE's capital structure; and the reasons why the interests are held by us.
Our purchased investment securities include unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust's economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust's economic performance. We evaluated all of our positions in such investments for consolidation.
For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, a portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation.
We perform ongoing reassessments of: (i) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (ii) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change.
We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our condensed consolidated statements of operations. The residual difference shown on our condensed consolidated statements of operations in the line item "Change in net assets related to consolidated VIEs" represents our beneficial interest in the VIEs.
We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our condensed consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled "VIE liabilities." The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned ("REO"). These assets in the aggregate are likewise presented as a single line item entitled "VIE assets."
Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to non-performance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a trust, any existing
12
Table of Contents

REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP.
In addition to sharing a similar measurement method as the loans in a trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a trust.
REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 2% of our consolidated securitization VIE assets, with the remaining 98% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually.
Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities.
For these reasons, the assets of our securitization VIEs are presented in the aggregate.
Fair Value Option
The guidance in ASC 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method.
We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for residential loans held-for-investment were made in order to maintain consistency across all our residential loans. The fair value elections for mortgage loans held-for-sale were made due to the expected short-term holding period of these instruments.
Fair Value Measurements
We measure our mortgage-backed securities, investments of consolidated affordable housing fund, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are "static"; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 20 for further discussion regarding our fair value measurements.
13
Table of Contents

Loans Held-for-Investment
Loans that are held for investment ("HFI") are carried at cost, net of unamortized acquisition premiums or discounts, loan fees and origination costs, as applicable, and net of credit loss allowances as discussed below, unless we have elected to apply the fair value option at purchase.
Loans Held-For-Sale
Our loans that we intend to sell or liquidate in the short-term are classified as held-for-sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. We periodically enter into derivative financial instruments to hedge unpredictable changes in fair value of loans held-for-sale, including changes resulting from both interest rates and credit quality. Because these derivatives are not designated, changes in their fair value are recorded in earnings. In order to best reflect the results of the hedged loan portfolio in earnings, we have elected the fair value option for these loans. As a result, changes in the fair value of the loans are also recorded in earnings.
Investment Securities
We designate our debt investment securities as held-to-maturity ("HTM"), available-for-sale ("AFS"), or trading depending on our investment strategy and ability to hold such securities to maturity. HTM debt securities where we have not elected to apply the fair value option are stated at cost plus any premiums or discounts, which are amortized or accreted through the condensed consolidated statements of operations using the effective interest method. Debt securities we (i) do not hold for the purpose of selling in the near-term, or (ii) may dispose of prior to maturity, are classified as AFS and are carried at fair value in the accompanying financial statements. Unrealized gains or losses on AFS debt securities where we have not elected the fair value option are reported as a component of accumulated other comprehensive income ("AOCI") in stockholders' equity. Our HTM and AFS debt securities are also subject to credit loss allowances as discussed below.
Our only equity investment security is carried at fair value, with unrealized holding gains and losses recorded in earnings.
Credit Losses
Loans and Debt Securities Measured at Amortized Cost
ASC 326, Financial Instruments - Credit Losses, became effective for the Company on January 1, 2020. ASC 326 mandates the use of a current expected credit loss model ("CECL") for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the "incurred loss" credit model previously required under GAAP. The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous "incurred loss" methodology. The CECL model applies to our HFI loans and our HTM debt securities which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities. However, as permitted by ASC 326, we have elected not to measure an allowance for credit losses on accrued interest receivable (which is classified separately on our condensed consolidated balance sheets), but rather write off in a timely manner by reversing interest income and/or cease accruing interest that would likely be uncollectible.
As we do not have a history of realized credit losses on our HFI loans and HTM securities, we have subscribed to third party database services to provide us with historical industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios. See Note 4 for further discussion of our methodologies.
We also evaluate each loan and security measured at amortized cost for credit deterioration at least quarterly. Credit deterioration occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan or security. If a loan or security is considered to be credit deteriorated, we depart from the industry loss rate approach described above and determine the credit loss allowance as any excess of the amortized cost basis of the loan or security over (i) the present value of expected future cash flows discounted at the contractual effective interest rate or (ii) the fair value of the collateral, if repayment is expected solely from the collateral.
14
Table of Contents

Available-for-Sale Debt Securities
Separate provisions of ASC 326 apply to our AFS debt securities, which are carried at fair value with unrealized gains and losses reported as a component of AOCI. We are required to establish an initial credit loss allowance for those securities that are purchased with credit deterioration ("PCD") by grossing up the amortized cost basis of each security and providing an offsetting credit loss allowance for the difference between expected cash flows and contractual cash flows, both on a present value basis.
Subsequently, cumulative adverse changes in expected cash flows on our AFS debt securities are recognized currently as an increase to the allowance for credit losses. However, the allowance is limited to the amount by which the AFS debt security's amortized cost exceeds its fair value. Favorable changes in expected cash flows are first recognized as a decrease to the allowance for credit losses (recognized currently in earnings). Such changes would be recognized as a prospective yield adjustment only when the allowance for credit losses is reduced to zero. A change in expected cash flows that is attributable solely to a change in a variable interest reference rate does not result in a credit loss and is accounted for as a prospective yield adjustment.
Investments of Consolidated Affordable Housing Fund
On November 5, 2021, we established Woodstar Portfolio Holdings, LLC (the "Woodstar Fund"), an investment fund which holds our Woodstar multifamily affordable housing portfolios consisting of 59 properties with 15,057 units located in Central and South Florida. As managing member of the Woodstar Fund, we manage interests purchased by third party investors seeking capital appreciation and an ongoing return, for which we earn (i) a management fee based on each investor's share of total Woodstar Fund equity; and (ii) an incentive distribution if the Woodstar Fund's returns exceed an established threshold. In connection with the establishment of the Woodstar Fund, we entered into subscription and other related agreements with certain third party institutional investors to sell, through a feeder fund structure, an aggregate 20.6% interest in the Woodstar Fund for an initial aggregate subscription price of $216.0 million, which was adjusted to $214.2 million post-closing. The Woodstar Fund has an initial term of eight years.

Effective with the third party interest sale, the Woodstar Fund has the characteristics of an investment company under ASC 946, Financial Services - Investment Companies. Accordingly, the Woodstar Fund is required to carry the investments in its properties at fair value, with a cumulative effect adjustment between the fair value and previous carrying value of its investments recognized in stockholders' equity as of November 5, 2021, the date of the Woodstar Fund's change in status to an investment company. Because we are the primary beneficiary of the Woodstar Fund, which is a VIE (as discussed in Note 15), we consolidate the accounts of the Woodstar Fund into our consolidated financial statements, retaining the fair value basis of accounting for its investments. Realized and unrealized changes in the fair value of the Woodstar Fund's property investments, and distributions thereon, are recognized in the "Income from affordable housing fund investments" caption within the other income (loss) section of our condensed consolidated statements of operations. See Note 7 for further details regarding the Woodstar Fund's investments and related income and Note 17 with respect to its contingently redeemable non-controlling interests which are classified as "Temporary Equity" in our condensed consolidated balance sheets.
Revenue Recognition
Interest Income
Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections.
We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan's outstanding principal balance is only recognized when received in cash. If full recovery of principal is doubtful or if collection of interest is less than probable, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual
15
Table of Contents

status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms.
For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Such excess, if any, is recognized as interest income on a level-yield basis over the life of the loan.
Upon the sale of loans or securities which are not accounted for pursuant to the fair value option, the excess (or deficiency) of net proceeds over the net carrying value of such loans or securities is recognized as a realized gain (loss).
Servicing Fees
We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met.
Rental Income
Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor.
Foreign Currency Translation
Our assets and liabilities denominated in foreign currencies are translated into U.S. dollars using foreign currency exchange rates at the end of the reporting period. Income and expenses are translated at the average exchange rates for each reporting period. The effects of translating the assets, liabilities and income of our foreign investments held by entities with a U.S. dollar functional currency are included in foreign currency gain (loss) in the consolidated statements of operations. Realized foreign currency gains and losses and changes in the value of foreign currency denominated monetary assets and liabilities are included in the determination of net income and are reported as foreign currency gain (loss) in our condensed consolidated statements of operations.

Income Taxes
The Company has elected to be taxed as a REIT under the Code. The Company is subject to federal income taxation at corporate rates on its REIT taxable income, however, the Company is allowed a deduction for the amount of dividends paid to its stockholders in arriving at its REIT taxable income. As a result, distributed net income of the Company is subjected to taxation at the stockholder level only. The Company intends to continue operating in a manner that will permit it to maintain its qualification as a REIT for tax purposes.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods.

We recognize tax positions in the financial statements only when it is more likely than not that, based on the technical merits of the tax position, the position will be sustained upon examination by the relevant taxing authority. A tax position is measured at the largest amount of benefit that will more likely than not be realized upon settlement. If, as a result of new events or information, a recognized tax position no longer is considered more likely than not to be sustained upon examination, a liability is established for the unrecognized benefit with a corresponding charge to income tax expense in our consolidated
16
Table of Contents

statement of operations. We report interest and penalties, if any, related to income tax matters as a component of income tax expense.

Earnings Per Share
We present both basic and diluted earnings per share ("EPS") amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested restricted stock awards ("RSAs") and restricted stock units ("RSUs") and any outstanding discounted share purchase options under the Employee Stock Purchase Program ("ESPP"), (ii) shares contingently issuable to our Manager, (iii) the conversion options associated with our senior convertible notes (the "Convertible Notes") (see Notes 11 and 18) and (iv) non-controlling interests that are redeemable with our common stock (see Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period.

Nearly all of the Company's unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 17). Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the three months ended March 31, 2024 and 2023, the two-class method resulted in the most dilutive EPS calculation.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our investments, which has a significant impact on the amount of income that we record and/or disclose. In addition, the fair value of assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows. Amounts ultimately realized from our investments may vary significantly from the fair values presented.
We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2024. Actual results may ultimately differ from those estimates.
Reclassifications
Acquisition and investment pursuit costs were combined within other expense in the prior period condensed consolidated statement of operations to conform with the current period presentation.
Recent Accounting Developments
On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU is effective for our fiscal year ending December 31, 2024 and interim quarters beginning in 2025, with early adoption permitted. It must be retrospectively applied to all prior periods presented. We do not expect this ASU will have a material impact on the Company's reportable segment disclosures, as it already reports significant items within revenues, costs and expenses and other income (loss) categories by segment.
On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which improves income tax disclosures by primarily requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This ASU is effective for our fiscal year ending December 31, 2025, with early adoption permitted. It is to be applied on a prospective basis, with retrospective application permitted. We do not expect this ASU will have a material impact on the Company's income tax disclosures.
17
Table of Contents

On March 6, 2024, the SEC adopted final rules requiring the disclosure of certain climate-related information in registration statements and annual reports filed with the SEC. The SEC has voluntarily stayed the effectiveness of the new rules pending completion of a judicial review of legal challenges to the rules. In the event the stay is lifted, the new rules would, among other things, require disclosure within the notes to the financial statements of certain specified climate-related financial statement effects of severe weather events and other natural conditions and related information. If the stay is lifted and the effective dates unchanged, such financial statement disclosure requirement will be effective for our fiscal year ending December 31, 2025. We do not expect this requirement will have a material impact on the Company's consolidated financial statement disclosures, as it has not historically experienced significant effects from severe weather events and other natural conditions.
3. Acquisitions and Divestitures
Property Segment Master Lease Portfolio

On February 29, 2024, we sold the 16 retail properties which comprised our Property Segment's Master Lease Portfolio for a gross sale price of $387.1 million. In connection with the sale, the purchaser assumed the related mortgage debt of $194.9 million, which resulted in net proceeds of $188.0 million after selling costs. We recognized a gain of $92.0 million, which is included within gain on sale of investments and other assets in our condensed consolidated statement of operations for the three months ended March 31, 2024, and a $1.2 million loss on extinguishment of debt.

Investing and Servicing Segment Property Portfolio ("REIS Equity Portfolio")

During the three months ended March 31, 2024 and 2023, there were no material sales of property within the REIS Equity Portfolio.

Commercial and Residential Lending Segment
During the three months ended March 31, 2024 and 2023, there were no sales of property within the Commercial and Residential Lending Segment.

During the three months ended March 31, 2024 and 2023, we had no significant acquisitions of properties or businesses.


18
Table of Contents

4. Loans
Our loans held-for-investment are accounted for at amortized cost and our loans held-for-sale are accounted for at the lower of cost or fair value, unless we have elected the fair value option for either. The following tables summarize our investments in mortgages and loans as of March 31, 2024 and December 31, 2023 (dollars in thousands):
March 31, 2024 Carrying
Value 		Face
Amount 		Weighted
Average
Coupon (1) 		Weighted
Average Life
("WAL")
(years)(2)
Loans held-for-investment:
Commercial loans:
First mortgages (3) $ 14,107,898 $ 14,142,331 9.0 % 2.7
Subordinated mortgages (4) 77,495 77,619 14.8 % 2.1
Mezzanine loans (3) 296,699 298,400 13.9 % 2.4
Other 70,666 71,187 9.6 % 1.6
Total commercial loans 14,552,758 14,589,537
Infrastructure first priority loans (5)
2,385,750 2,429,790 9.4 % 3.7
Total loans held-for-investment 16,938,508 17,019,327
Loans held-for-sale:
Residential, fair value option 2,518,600 2,863,512 4.5 % N/A (6)
Commercial, fair value option
123,619 126,955 6.8 % 6.4
Infrastructure, lower of cost or fair value (5)
47,149 49,500 11.5 % N/A
Total loans held-for-sale 2,689,368 3,039,967
Total gross loans 19,627,876 $ 20,059,294
Credit loss allowances:
Commercial loans held-for-investment (322,087)
Infrastructure loans held-for-investment (9,559)
Total allowances (331,646)
Total net loans $ 19,296,230
December 31, 2023
Loans held-for-investment:
Commercial loans:
First mortgages (3) $ 14,956,646 $ 15,005,827 9.0 % 2.8
Subordinated mortgages (4) 76,560 76,882 14.8 % 2.2
Mezzanine loans (3) 273,146 274,899 13.7 % 2.7
Other 71,012 71,843 9.6 % 1.8
Total commercial loans 15,377,364 15,429,451
Infrastructure first priority loans 2,505,924 2,550,244 9.5 % 3.9
Total loans held-for-investment 17,883,288 17,979,695
Loans held-for-sale:
Residential, fair value option 2,604,594 2,909,126 4.5 % N/A (6)
Commercial, fair value option 41,043 45,400 5.5 % 5.2
Total loans held-for-sale 2,645,637 2,954,526
Total gross loans 20,528,925 $ 20,934,221
Credit loss allowances:
Commercial loans held-for-investment (298,775)
Infrastructure loans held-for-investment (10,264)
Total allowances (309,039)
Total net loans $ 20,219,886
19
Table of Contents

______________________________________________________________________________________________________________________
(1)Calculated using applicable index rates as of March 31, 2024 and December 31, 2023 for variable rate loans and excludes loans for which interest income is not recognized.
(2)Represents the WAL of each respective group of loans, excluding loans for which interest income is not recognized, as of the respective balance sheet date. For commercial loans held-for-investment, the WAL is calculated assuming all extension options are exercised by the borrower, although our loans may be repaid prior to such date. For infrastructure loans, the WAL is calculated using the amounts and timing of future principal payments, as projected at origination or acquisition of each loan.
(3)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 $1.0 billion being classified as first mortgages as of both March 31, 2024 and December 31, 2023.
(4)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.
(5)During the three months ended March 31, 2024, a $48.7 million infrastructure loan held-for-investment was reclassified into loans held-for-sale, at which time a $1.5 million fair value adjustment was provided based on the contractual sale price.
(6)Residential loans have a weighted average remaining contractual life of 27.6 years and 27.8 years as of March 31, 2024 and December 31, 2023, respectively.
As of March 31, 2024, our variable rate loans held-for-investment, excluding loans for which interest income is not recognized, were as follows (dollars in thousands):
March 31, 2024 Carrying
Value 		Weighted-average
Spread Above Index
Commercial loans $ 13,698,698 3.9 %
Infrastructure loans 2,385,750 4.0 %
Total variable rate loans held-for-investment $ 16,084,448 3.9 %

Credit Loss Allowances
As discussed in Note 2, we do not have a history of realized credit losses on our HFI loans and HTM securities, so we have subscribed to third party database services to provide us with industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios.
For our commercial loans, we utilize a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading CMBS data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. We provide specific loan-level inputs which include loan-to-stabilized-value ("LTV") and debt service coverage ratio (DSCR) metrics, as well as principal balances, property type, location, coupon, origination year, term, subordination, expected repayment dates and future fundings. We also select from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. We categorize the results by LTV range, which we consider the most significant indicator of credit quality for our commercial loans, as set forth in the credit quality indicator table below. A lower LTV ratio typically indicates a lower credit loss risk.
The macroeconomic forecasts do not differentiate among property types or asset classes. Instead, these forecasts reference general macroeconomic conditions (i.e. Gross Domestic Product, employment and interest rates) which apply broadly across all assets. For instance, although the office sector has been adversely affected by the increase in remote working arrangements and the retail sector has been adversely affected by electronic commerce, the broad macroeconomic forecasts do not account for such differentiation. Accordingly, we have selected more adverse macroeconomic recovery forecasts related to office and retail properties than for other property types in determining our credit loss allowance.
20
Table of Contents

For our infrastructure loans, we utilize a database of historical infrastructure loan performance that is shared among a consortium of banks and other lenders and compiled by a major bond credit rating agency. The database is representative of industry-wide project finance activity dating back to 1983. We derive historical loss rates from the database filtered by industry, sub-industry, term and construction status for each of our infrastructure loans. Those historical loss rates reflect global economic cycles over a long period of time as well as average recovery rates. We categorize the results principally between the power and oil and gas industries, which we consider the most significant indicator of credit quality for our infrastructure loans, as set forth in the credit quality indicator table below.
As discussed in Note 2, we use a discounted cash flow or collateral value approach, rather than the industry loan loss approach described above, to determine credit loss allowances for any credit deteriorated loans.
We regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral, as well as the financial and operating capability of the borrower. Specifically, the collateral's operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and/or (iii) the collateral's liquidation value. We also evaluate the financial wherewithal of any loan guarantors as well as the borrower's competency in managing and operating the collateral. In addition, we consider the overall economic environment, real estate or industry sector, and geographic sub-market in which the borrower operates. Such analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower's exit plan, and capitalization and discount rates, (ii) site inspections and (iii) current credit spreads and discussions with market participants.
The significant credit quality indicators for our loans measured at amortized cost, which excludes loans held-for-sale, were as follows as of March 31, 2024 (dollars in thousands):
Term Loans
Amortized Cost Basis by Origination Year 		Revolving Loans
Amortized Cost
Total 		Total
Amortized
Cost Basis 		Credit
Loss
Allowance
As of March 31, 2024 2024 2023 2022 2021 2020 Prior
Commercial loans:
Credit quality indicator:
LTV < 60% $ - $ 39,940 $ 2,030,997 $ 2,722,811 $ 188,168 $ 1,082,498 $ - $ 6,064,414 $ 18,658
LTV 60% - 70% - 797,229 1,951,080 3,429,617 96,804 317,598 - 6,592,328 127,080
LTV > 70% - 61,805 103,050 400,086 223,480 1,032,003 - 1,820,424 171,424
Credit deteriorated - - - - - 4,925 - 4,925 4,925
Defeased and other - 14,224 41,868 - - 14,575 - 70,667 -
Total commercial $ - $ 913,198 $ 4,126,995 $ 6,552,514 $ 508,452 $ 2,451,599 $ - $ 14,552,758 $ 322,087
Infrastructure loans:
Credit quality indicator:
Power $ - $ 390,601 $ - $ 104,679 $ 68,445 $ 734,584 $ 13,506 $ 1,311,815 $ 3,674
Oil and gas - 410,029 141,259 183,794 36,101 302,752 - 1,073,935 5,885
Total infrastructure $ - $ 800,630 $ 141,259 $ 288,473 $ 104,546 $ 1,037,336 $ 13,506 $ 2,385,750 $ 9,559
Loans held-for-sale 2,689,368 -
Total gross loans $ 19,627,876 $ 331,646



21
Table of Contents

Non-Credit Deteriorated Loans
As of March 31, 2024, we had the following loans with a combined amortized cost basis of $427.9 million that were 90 days or greater past due at March 31, 2024: (i) a $125.1 million senior mortgage loan on an office building in Arlington, Virginia; (ii) a $123.9 million senior mortgage loan on an office building in Washington, DC; (iii) a $51.5 million first mortgage and mezzanine loan on a multifamily property in Nashville, Tennessee; (iv) a $37.8 million leasehold mortgage loan on a luxury resort in California destroyed by wildfire; (v) $80.4 million of residential loans; and (vi) a $9.2 million loan on a hospitality asset in New York City that our Investing and Servicing segment acquired as nonperforming in October 2021. All of these loans were on nonaccrual as of March 31, 2024.
We also had the following loans on nonaccrual that were not 90 days or greater past due as of March 31, 2024: (i) a $185.4 million senior loan on a retail and entertainment project in New Jersey; and (ii) a $6.4 million junior mezzanine loan (commitment of $18.2 million) issued during the three months ended March 31, 2024 in connection with a loan modification on two connected office buildings in Washington, DC (see related discussion below). These loans were not considered credit deteriorated as we presently expect to recover all amounts due.
Credit Deteriorated Loans
As of March 31, 2024, we had a $4.9 million commercial subordinated loan secured by a department store in Chicago which was deemed credit deteriorated and was fully reserved in prior years. The loan was on nonaccrual under the cost recovery method as of March 31, 2024.
Loan Modifications
We may amend or modify a loan based on its specific facts and circumstances. During the three months ended March 31, 2024, we made modifications to three commercial loans described below, which are disclosable under ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures, as they involved an other-than-insignificant payment delay and/or an interest rate reduction for a borrower experiencing financial difficulty. The three loans had a combined amortized cost basis of $650.8 million, representing 4.5% of our commercial loans as of March 31, 2024. These types of modifications generally provide a borrower additional time to refinance or sell the collateral property in order to repay the principal balance of the loan and/or provide some interest payment relief to a borrower experiencing operating cash shortfalls.
For a $322.2 million first mortgage and mezzanine loan on two connected office buildings in Washington, D.C., we granted a 24-month term extension and a 285 bps reduction in the interest rate to SOFR (floor of 5.0%) plus 1.0%. In addition, we provided an $18.2 million junior mezzanine loan (of which $6.4 million was funded as of March 31, 2024), principally to fund new leasing costs prior to the loan's extended maturity. As part of this modification, we will receive a percentage of net sales proceeds in excess of the loan amount if the underlying collateral is sold, or a percentage of the equity if the collateral is refinanced. For a $252.0 million senior mortgage loan on an office building in Houston, Texas, we granted a 28-month term extension plus two additional one-year extension options, and provided a $30.0 million preferred equity commitment (of which $22.9 million was unfunded as of March 31, 2024), principally to fund new leasing costs prior to the loan's extended maturity. For a $76.6 million first mortgage loan on a multifamily property in Birmingham, Alabama, the interest rate was reduced 55 bps for 24 months (which reduction is recaptured in a new exit fee), with the borrower contributing $3.4 million of additional equity. Each of these loans have paid all contractual interest due as of March 31, 2024. The modified terms of the loans were included in the determination of our general CECL reserve.
Loans with modifications disclosed in the previous twelve months are performing in accordance with their modified terms except for a $45.0 million first mortgage loan on a multifamily property in Arizona which did not pay $0.6 million of the reduced interest due during the three months ended March 31, 2024.
22
Table of Contents

The following tables present the activity in our credit loss allowance for funded loans and unfunded commitments (amounts in thousands):
Funded Commitments Credit Loss Allowance
Loans Held-for-Investment Total
Funded Loans
Three Months Ended March 31, 2024
Commercial Infrastructure
Credit loss allowance at December 31, 2023 $ 298,775 $ 10,264 $ 309,039
Credit loss provision (reversal), net
23,312 (705) 22,607
Credit loss allowance at March 31, 2024 $ 322,087 $ 9,559 $ 331,646

Unfunded Commitments Credit Loss Allowance (1)
Loans Held-for-Investment HTM Preferred
Three Months Ended March 31, 2024
Commercial Infrastructure Interests (2) CMBS (2) Total
Credit loss allowance at December 31, 2023 $ 8,742 $ 564 $ 1,548 $ 74 $ 10,928
Credit loss provision, net
571 23 6,645 1 7,240
Credit loss allowance at March 31, 2024 $ 9,313 $ 587 $ 8,193 $ 75 $ 18,168
Memo: Unfunded commitments as of March 31, 2024 (3)
$ 1,035,180 $ 66,090 $ 30,686 $ 31,916 $ 1,163,872
______________________________________________________________________________________________________________________
(1)Included in accounts payable, accrued expenses and other liabilities in our consolidated balance sheets.
(2)See Note 5 for further details.
(3)Represents amounts expected to be funded (see Note 22).
Loan Portfolio Activity
The activity in our loan portfolio was as follows (amounts in thousands):
Held-for-Investment Loans
Three Months Ended March 31, 2024
Commercial Infrastructure Residential Held-for-Sale Loans Total Loans
Balance at December 31, 2023 $ 15,078,589 $ 2,495,660 $ - $ 2,645,637 $ 20,219,886
Acquisitions/originations/additional funding 131,886 133,299 - 289,508 554,693
Capitalized interest (1) 20,418 - - - 20,418
Basis of loans sold (2) - - - (218,597) (218,597)
Loan maturities/principal repayments (892,855) (209,131) - (45,316) (1,147,302)
Discount accretion/premium amortization 15,090 4,801 - - 19,891
Changes in fair value - - - (29,013) (29,013)
Foreign currency translation loss, net
(99,145) (448) - - (99,593)
Credit loss provision, net (23,312) 705 - (1,546) (24,153)
Transfer to/from other asset classifications or between segments - (48,695) - 48,695 -
Balance at March 31, 2024 $ 14,230,671 $ 2,376,191 $ - $ 2,689,368 $ 19,296,230

Held-for-Investment Loans
Three Months Ended March 31, 2023
Commercial Infrastructure Residential Held-for-Sale Loans Total Loans
Balance at December 31, 2022 $ 16,048,507 $ 2,352,932 $ - $ 2,784,594 $ 21,186,033
Acquisitions/originations/additional funding 259,113 172,502 - 69,200 500,815
Capitalized interest (1) 27,924 130 - - 28,054
Basis of loans sold (2) - - - (13,439) (13,439)
Loan maturities/principal repayments (256,644) (165,323) - (38,367) (460,334)
Discount accretion/premium amortization 12,551 2,629 - - 15,180
Changes in fair value - - - 8,901 8,901
Foreign currency translation loss, net 32,820 300 - - 33,120
Credit loss provision, net (29,678) (5,339) - - (35,017)
Balance at March 31, 2023 $ 16,094,593 $ 2,357,831 $ - $ 2,810,889 $ 21,263,313
23
Table of Contents

______________________________________________________________________________________________________________________
(1)Represents accrued interest income on loans whose terms do not require current payment of interest.
(2)See Note 12 for additional disclosure on these transactions.
5. Investment Securities
Investment securities were comprised of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):
Carrying Value as of
March 31, 2024 December 31, 2023
RMBS, available-for-sale $ 100,319 $ 102,368
RMBS, fair value option (1) 434,916 449,909
CMBS, fair value option (1), (2) 1,124,724 1,147,550
HTM debt securities, amortized cost net of credit loss allowance of $17,589 and $13,143
589,003 606,254
Equity security, fair value 7,265 8,340
Subtotal-Investment securities
2,256,227 2,314,421
VIE eliminations (1) (1,540,154) (1,578,859)
Total investment securities $ 716,073 $ 735,562
______________________________________________________________________________________________________________________
(1)Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810.
(2)Includes $171.1 million and $177.3 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of March 31, 2024 and December 31, 2023, respectively.
Purchases, sales and redemptions, and principal collections for all investment securities were as follows (amounts in thousands):
RMBS,
available-for-sale 		RMBS, fair
value option 		CMBS, fair
value option 		HTM
Securities 		Equity
Security 		Securitization
VIEs (1) 		Total
Three Months Ended March 31, 2024
Purchases/fundings $ - $ - $ - $ 9,220 $ - $ - $ 9,220
Sales and redemptions - - 3,166 - 1,314 (3,166) 1,314
Principal collections 1,925 11,883 3,200 17,163 - (15,022) 19,149
Three Months Ended March 31, 2023
Purchases/fundings $ - $ - $ - $ 591 $ - $ - $ 591
Sales and redemptions - - - - - -
Principal collections 2,435 14,220 1,254 38,198 - (15,329) 40,778
_________________________________________________________________________________________________________________
(1)Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as issuance or repayment of debt of, or distributions from, consolidated VIEs in our consolidated statements of cash flows.
RMBS, Available-for-Sale
The Company classified all of its RMBS not eliminated in consolidation as available-for-sale as of March 31, 2024 and December 31, 2023. These RMBS are reported at fair value in the balance sheet with changes in fair value recorded in accumulated other comprehensive income ("AOCI").

24
Table of Contents

The tables below summarize various attributes of our investments in available-for-sale RMBS as of March 31, 2024 and December 31, 2023 (amounts in thousands):
Unrealized Gains or (Losses)
Recognized in AOCI
Amortized
Cost 		Credit
Loss
Allowance 		Net
Basis 		Gross
Unrealized
Gains 		Gross
Unrealized
Losses 		Net
Fair Value
Adjustment 		Fair Value
March 31, 2024
RMBS $ 86,258 $ - $ 86,258 $ 16,967 $ (2,906) $ 14,061 $ 100,319
December 31, 2023
RMBS $ 87,016 $ - $ 87,016 $ 18,092 $ (2,740) $ 15,352 $ 102,368
Weighted Average Coupon (1) WAL
(Years) (2)
March 31, 2024
RMBS 5.8 % 7.8
______________________________________________________________________________________________________________________
(1)Calculated using the March 31, 2024 SOFR rate of 5.329% for floating rate securities.
(2)Represents the remaining WAL of each respective group of securities as of the balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments.
As of March 31, 2024, approximately $89.4 million, or 89%, of RMBS were variable rate. We purchased all of the RMBS at a discount, a portion of which is accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount.
We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $0.2 million for both the three months ended March 31, 2024 and 2023, respectively, recorded as management fees in the accompanying condensed consolidated statements of operations.
The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of March 31, 2024 and December 31, 2023, and for which an allowance for credit losses has not been recorded (amounts in thousands):
Estimated Fair Value Unrealized Losses
Securities with a
loss less than
12 months 		Securities with a
loss greater than
12 months 		Securities with a
loss less than
12 months 		Securities with a
loss greater than
12 months
As of March 31, 2024
RMBS $ 6,375 $ 12,714 $ (526) $ (2,380)
As of December 31, 2023
RMBS $ 10,687 $ 6,361 $ (1,322) $ (1,418)
As of March 31, 2024 and December 31, 2023, there were 15 and 14 securities, respectively, with unrealized losses reflected in the table above. After evaluating the securities, we concluded that the unrealized losses reflected above were noncredit-related and would be recovered from the securities' estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the securities, it was not considered more likely than not that we would be forced to sell the securities prior to recovering our amortized cost, and there were no material credit events that would have caused us to otherwise conclude that we would not recover our cost. Credit losses, if any, are calculated by comparing (i) the estimated future cash flows of each security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) our net amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or credit losses could be materially different from what is currently projected and/or reported.

25
Table of Contents

CMBS and RMBS, Fair Value Option
As discussed in the "Fair Value Option" section of Note 2 herein, we elect the fair value option for certain CMBS and RMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of March 31, 2024, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $1.1 billion and $2.7 billion, respectively. As of March 31, 2024, the fair value and unpaid principal balance of RMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $434.9 million and $326.3 million, respectively. The $1.6 billion total fair value balance of CMBS and RMBS represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value (all except $19.5 million at March 31, 2024) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option investment securities.
As of March 31, 2024, none of our CMBS or RMBS were variable rate.
HTM Debt Securities, Amortized Cost
The table below summarizes our investments in HTM debt securities as of March 31, 2024 and December 31, 2023 (amounts in thousands):
Amortized
Cost Basis 		Credit Loss
Allowance 		Net Carrying
Amount 		Gross Unrealized
Holding Gains 		Gross Unrealized
Holding Losses 		Fair Value
March 31, 2024
CMBS $ 561,174 $ (182) $ 560,992 $ 56 $ (24,145) $ 536,903
Preferred interests 16,916 (7,328) 9,588 - (966) 8,622
Infrastructure bonds 28,502 (10,079) 18,423 30 (15) 18,438
Total $ 606,592 $ (17,589) $ 589,003 $ 86 $ (25,126) $ 563,963
December 31, 2023
CMBS $ 580,704 $ (164) $ 580,540 $ 43 $ (24,835) $ 555,748
Preferred interests 9,570 (2,898) 6,672 - (318) 6,354
Infrastructure bonds 29,123 (10,081) 19,042 32 (16) 19,058
Total $ 619,397 $ (13,143) $ 606,254 $ 75 $ (25,169) $ 581,160
The following table presents the activity in our credit loss allowance for HTM debt securities (amounts in thousands):
CMBS Preferred
Interests 		Infrastructure
Bonds 		Total HTM
Credit Loss
Allowance
Three Months Ended March 31, 2024
Credit loss allowance at December 31, 2023 $ 164 $ 2,898 $ 10,081 $ 13,143
Credit loss provision (reversal), net
18 4,430 (2) 4,446
Credit loss allowance at March 31, 2024 $ 182 $ 7,328 $ 10,079 $ 17,589
As of March 31, 2024, we had a $10.0 million specific credit loss allowance on a $19.2 million infrastructure bond that is collateralized by a first priority lien on a coal-fired power plant in Mississippi. It was deemed credit deteriorated when we acquired the Infrastructure Lending Segment in 2018 and was placed on nonaccrual under the cost recovery method in 2023 due to a forbearance and restructuring plan agreed between the lenders and borrower that was necessitated by operating shortfalls at the plant.
We had the following commercial lending debt securities on nonaccrual that were not 90 days or greater past due as of March 31, 2024: (i) a $9.8 million preferred interest in an office park in Irvine, California and (ii) a $7.1 million preferred interest in an office building in Houston, Texas. Both of these investments were made in connection with loan modifications granted to a borrower experiencing financial difficulty, but are not considered credit deteriorated as we presently expect to recover all amounts due.

26
Table of Contents

The table below summarizes the maturities of our HTM debt securities by type as of March 31, 2024 (amounts in thousands):
CMBS Preferred
Interests 		Infrastructure
Bonds 		Total
Less than one year $ 80,084 $ 5,967 $ - $ 86,051
One to three years 433,011 - 239 433,250
Three to five years 47,897 3,621 9,070 60,588
Thereafter - - 9,114 9,114
Total $ 560,992 $ 9,588 $ 18,423 $ 589,003
Equity Security, Fair Value
During 2012, we acquired 9,140,000 ordinary shares from a related-party in Starwood European Real Estate Finance Limited ("SEREF"), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. During the three months ended March 31, 2024, 1,005,348 shares were redeemed by SEREF, for proceeds of $1.3 million, leaving 6,242,339 shares held as of March 31, 2024. There were no shares redeemed by SEREF during the three months ended March 31, 2023. The fair value of the investment remeasured in USD was $7.3 million and $8.3 million as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, our shares represent an approximate 2.3% interest in SEREF.
6. Properties
Our properties are held within the following portfolios:
Medical Office Portfolio
The Medical Office Portfolio is comprised of 34 medical office buildings acquired during the year ended December 31, 2016. These properties, which collectively comprise 1.9 million square feet, are geographically dispersed throughout the U.S. and primarily affiliated with major hospitals or located on or adjacent to major hospital campuses. The Medical Office Portfolio includes total gross properties and lease intangibles of $779.3 million and debt of $598.8 million as of March 31, 2024.
Investing and Servicing Segment Property Portfolio
The REIS Equity Portfolio is comprised of 6 commercial real estate properties which were acquired from CMBS trusts over time. The REIS Equity Portfolio includes total gross properties and lease intangibles of $109.6 million and debt of $68.5 million as of March 31, 2024.
Commercial and Residential Lending Segment Property Portfolio
The Commercial and Residential Lending Segment Portfolio represents properties acquired through loan foreclosure or exercise of control over a mezzanine loan borrower's pledged equity interests. This portfolio includes total gross properties and lease intangibles of $461.1 million and debt of $87.8 million as of March 31, 2024.
Woodstar Portfolios
Refer to Note 7 for a discussion of our Woodstar I and Woodstar II Portfolios which are not included in the table below.
27
Table of Contents

The table below summarizes our properties held-for-investment as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Depreciable Life March 31, 2024 December 31, 2023
Property Segment
Land and land improvements
0 - 12 years
$ 69,138 $ 68,923
Buildings and building improvements
0 - 40 years
630,325 629,511
Furniture & fixtures
3 - 5 years
691 608
Investing and Servicing Segment
Land and land improvements
0 - 15 years
20,229 20,229
Buildings and building improvements
3 - 40 years
65,527 65,433
Furniture & fixtures
2 - 5 years
2,921 2,899
Commercial and Residential Lending Segment
Land and land improvements
N/A
79,361 79,361
Buildings and building improvements
0 - 50 years
139,538 139,538
Construction in progress
N/A
222,842 218,205
Furniture & fixtures
5 years
2,003 2,003
Properties, cost 1,232,575 1,226,710
Less: accumulated depreciation (188,010) (180,326)
Properties, net $ 1,044,565 $ 1,046,384

On February 29, 2024, we sold the 16 retail properties which comprised our Property Segment's Master Lease Portfolio for a gross sale price of $387.1 million. In connection with the sale, the purchaser assumed the related mortgage debt of $194.9 million, which resulted in net proceeds of $188.0 million after selling costs. We recognized a gain of $92.0 million, which is included within gain on sale of investments and other assets in our condensed consolidated statement of operations for the three months ended March 31, 2024, and a $1.2 million loss on extinguishment of debt.

During the three months ended March 31, 2024 and 2023, there were no material sales of property within the REIS Equity Portfolio or Commercial and Residential Lending Segment.

7. Investments of Consolidated Affordable Housing Fund
As discussed in Note 2, we established the Woodstar Fund effective November 5, 2021, an investment fund which holds our Woodstar multifamily affordable housing portfolios. The Woodstar Portfolios consist of the following:

Woodstar I Portfolio
The Woodstar I Portfolio is comprised of 32 affordable housing communities with 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. During the year ended December 31, 2015, we acquired 18 of the 32 affordable housing communities of the Woodstar I Portfolio, with the final 14 communities acquired during the year ended December 31, 2016. The Woodstar I Portfolio includes properties at fair value of $1.8 billion and debt at fair value of $732.7 million as of March 31, 2024.
Woodstar II Portfolio
The Woodstar II Portfolio is comprised of 27 affordable housing communities with 6,109 units concentrated primarily in Central and South Florida. We acquired eight of the 27 affordable housing communities in December 2017, with the final 19 communities acquired during the year ended December 31, 2018. The Woodstar II Portfolio includes properties at fair value of $1.4 billion and debt at fair value of $481.6 million as of March 31, 2024.
28
Table of Contents

Income from the Woodstar Fund's investments reflects the following components for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31,
2024
2023
Distributions from affordable housing fund investments
$ 13,344 $ 11,805
Unrealized change in fair value of investments (1)
(3,896) 1,160
Income from affordable housing fund investments
$ 9,448 $ 12,965
______________________________________________________________________________________________________________________
(1)The fair value of the Woodstar Fund's investments are dependent upon the real estate and capital markets, which are cyclical in nature. Property and investment values are affected by, among other things, capitalization rates, the availability of capital, occupancy, rental rates and interest and inflation rates.
8. Investments in Unconsolidated Entities
The table below summarizes our investments in unconsolidated entities as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Participation /
Ownership % (1) 		Carrying value as of
March 31, 2024 December 31, 2023
Equity method investments:
Equity interests in two natural gas power plants
10% - 12%
$ 52,557 $ 52,230
Investor entity which owns equity in an online real estate company 50% 5,579 5,575
Various
20% - 50%
17,053 16,854
75,189 74,659
Other equity investments:
Equity interest in a servicing and advisory business 2% 12,955 12,955
Equity interest in a data center business in Ireland (2)
0.72%
7,334 1,313
Investment funds which own equity in a loan servicer and other real estate assets
4% - 6%
842 842
Various
3% - 15%
607 607
21,738 15,717
$ 96,927 $ 90,376
______________________________________________________________________________________________________________________
(1)None of these investments are publicly traded and therefore quoted market prices are not available.
(2)This equity interest was acquired in connection with the origination of a loan in 2021. The loan was repaid during the three months ended March 31, 2024. In connection with the repayment, an observable price change occurred when a 50% voting interest in this entity was acquired by related parties, including an investment fund and certain other entities affiliated with our Manager. As a result of the acquisition and resulting observable price change, we recorded a $6.0 million increase in the carrying value of our investment to reflect its fair value implied by the acquisition.
There were no differences between the carrying value of our equity method investments and the underlying equity in the net assets of the investees as of March 31, 2024.
During the three months ended March 31, 2024, we did not become aware of (i) any observable price changes in our other equity investments accounted for under the fair value practicability election, except as discussed above, or (ii) any indicators of impairment.
29
Table of Contents

9. Goodwill and Intangibles
Goodwill
Goodwill is tested for impairment annually in the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Infrastructure Lending Segment
The Infrastructure Lending Segment's goodwill of $119.4 million at both March 31, 2024 and December 31, 2023 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018 and October 15, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment's lending platform.
LNR Property LLC ("LNR")
The Investing and Servicing Segment's goodwill of $140.4 million at both March 31, 2024 and December 31, 2023 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR's existing platform, which includes a network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets.
Intangible Assets
Servicing Rights Intangibles
In connection with the LNR acquisition, we identified domestic servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. As of March 31, 2024 and December 31, 2023, the balance of the domestic servicing intangible was net of $34.3 million and $37.9 million, respectively, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of March 31, 2024 and December 31, 2023, the domestic servicing intangible had a balance of $53.9 million and $57.2 million, respectively, which represents our economic interest in this asset.
Lease Intangibles
In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain non-cancelable operating leases of the acquired properties.
The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of March 31, 2024 and December 31, 2023 (amounts in thousands):
As of March 31, 2024 As of December 31, 2023
Gross Carrying
Value 		Accumulated
Amortization 		Net Carrying
Value 		Gross Carrying
Value 		Accumulated
Amortization 		Net Carrying
Value
Domestic servicing rights, at fair value $ 19,612 $ - $ 19,612 $ 19,384 $ - $ 19,384
In-place lease intangible assets 96,158 (68,896) 27,262 96,158 (67,420) 28,738
Favorable lease intangible assets 27,928 (11,535) 16,393 27,928 (11,083) 16,845
Total net intangible assets $ 143,698 $ (80,431) $ 63,267 $ 143,470 $ (78,503) $ 64,967
30
Table of Contents

The following table summarizes the activity within intangible assets for the three months ended March 31, 2024 (amounts in thousands):
Domestic
Servicing
Rights 		In-place Lease
Intangible
Assets 		Favorable Lease
Intangible
Assets 		Total
Balance as of January 1, 2024
$ 19,384 $ 28,738 $ 16,845 $ 64,967
Amortization - (1,476) (452) (1,928)
Changes in fair value due to changes in inputs and assumptions 228 - - 228
Balance as of March 31, 2024 $ 19,612 $ 27,262 $ 16,393 $ 63,267
The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands):
2024 (remainder of) $ 5,267
2025 6,099
2026 4,573
2027 4,089
2028 3,943
Thereafter 19,684
Total $ 43,655


31
Table of Contents

10. Secured Borrowings
Secured Financing Agreements
The following table is a summary of our secured financing agreements in place as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Outstanding Balance at
Current
Maturity
Extended
Maturity (a)
Weighted Average
Pricing 		Pledged Asset
Carrying Value 		Maximum
Facility Size 		March 31, 2024 December 31, 2023
Repurchase Agreements:
Commercial Loans Jun 2024 to Dec 2028
(b)
Oct 2025 to Dec 2030
(b)
Index + 2.05%
(c)
$ 9,736,328 $ 12,234,452
(d)
$ 6,010,151 $ 7,170,389
Residential Loans Mar 2025 to Feb 2026 Mar 2025 to Apr 2026
SOFR + 1.90%
2,516,364 3,450,000 2,269,811 2,287,655
Infrastructure Loans Sep 2024 Sep 2026
SOFR + 2.07%
571,784 650,000 475,763 453,217
Conduit Loans Dec 2024 to Jun 2026 Dec 2025 to Jun 2027
SOFR + 2.15%
72,402 375,000 56,507 26,930
CMBS/RMBS Dec 2024 to Apr 2032
(e)
Mar 2025 to Oct 2032
(e)
(f) 1,397,945 990,460 706,459
(g)
714,168
Total Repurchase Agreements 14,294,823 17,699,912 9,518,691 10,652,359
Other Secured Financing:
Borrowing Base Facility Nov 2024 Oct 2026
SOFR + 2.11%
104,276 750,000
(h)
5,384 27,639
Commercial Financing Facilities Jul 2024 to Aug 2028 Jul 2025 to Dec 2030
Index + 2.24%
580,687 571,030
(i)
408,210 387,822
Infrastructure Financing Facilities Jul 2025 to Oct 2025 Oct 2027 to Jul 2032
Index + 2.15%
818,997 1,050,000 594,211 631,187
Property Mortgages - Fixed rate Oct 2025 to Jun 2026 N/A 4.52% 32,436 29,797 29,797 29,898
Property Mortgages - Variable rate Nov 2024 to Dec 2025 N/A (j) 677,616 707,941 705,916 853,145
Term Loans and Revolver (k) N/A (k) N/A
(k)
1,513,281 1,363,281 1,366,778
Total Other Secured Financing 2,214,012 4,622,049 3,106,799 3,296,469
$ 16,508,835 $ 22,321,961 12,625,490 13,948,828
Unamortized net discount (23,530) (24,975)
Unamortized deferred financing costs (45,473) (55,857)
$ 12,556,487 $ 13,867,996
______________________________________________________________________________________________________________________
(a)Subject to certain conditions as defined in the respective facility agreement.
(b)For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.
(c)Certain facilities with an outstanding balance of $2.5 billion as of March 31, 2024 are indexed to EURIBOR, BBSY, SARON and SONIA. The remainder are indexed to SOFR.
(d)Certain facilities with an aggregate initial maximum facility size of $11.8 billion may be increased to $12.2 billion, subject to certain conditions. The $12.2 billion amount includes such upsizes.
(e)Certain facilities with an outstanding balance of $330.9 million as of March 31, 2024 carry a rolling 12-month term which may reset quarterly with the lender's consent. These facilities carry no maximum facility size.
(f)A facility with an outstanding balance of $279.0 million as of March 31, 2024 has a weighted average fixed annual interest rate of 3.54%. All other facilities are variable rate with a weighted average rate of SOFR + 2.19%.
(g)Includes: (i) $279.0 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $32.2 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).
(h)The maximum facility size as of March 31, 2024 of $450.0 million may be increased to $750.0 million, subject to certain conditions.
(i)Certain facilities with an aggregate initial maximum facility size of $471.0 million may be increased to $571.0 million, subject to certain conditions. The $571.0 million amount includes such upsizes.
(j)Includes a $600.0 million first mortgage and mezzanine loan secured by our Medical Office Portfolio. This debt has a weighted average interest rate of SOFR + 2.18% that we swapped to a fixed rate of 3.46%. The remainder have a weighted average rate of SOFR + 2.73%.
(k)Consists of: (i) a $770.8 million term loan facility that matures in July 2026, of which $382.0 million has an annual interest rate of SOFR + 2.60% and $388.8 million has an annual interest rate of SOFR + 3.35%, subject to a 0.75% SOFR floor, (ii) a $150.0 million revolving credit facility that matures in April 2026 with an annual interest rate of SOFR + 2.60% and (iii) a $592.5 million term loan facility that matures in November 2027, with an annual interest
32
Table of Contents

rate of SOFR + 3.25%, subject to a 0.50% SOFR floor. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $5.9 billion as of March 31, 2024.

The above table no longer reflects property mortgages of the Woodstar Portfolios which, as discussed in Notes 2 and 7, are now reflected within "Investments of consolidated affordable housing fund" on our condensed consolidated balance sheets.

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.

Our secured financing agreements contain certain financial tests and covenants. As of March 31, 2024, we were in compliance with all such covenants.

We seek to mitigate risks associated with our repurchase agreements by managing risk related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value. The margin call provisions under the majority of our repurchase facilities, consisting of 65% of these agreements, do not permit valuation adjustments based on capital market events and are limited to collateral-specific credit marks generally determined on a commercially reasonable basis. To monitor credit risk associated with the performance and value of our loans and investments, our asset management team regularly reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. For the 35% of repurchase agreements which do permit valuation adjustments based on capital market events, approximately 6% of these pertain to our loans held-for-sale, for which we manage credit risk through the purchase of credit index instruments. We further seek to manage risks associated with our repurchase agreements by matching the maturities and interest rate characteristics of our loans with the related repurchase agreement.
For the three months ended March 31, 2024 and 2023, approximately $9.6 million and $10.2 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations.

As of March 31, 2024, Morgan Stanley Bank, N.A., Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. held collateral sold under certain of our repurchase agreements with carrying values that exceeded the respective repurchase obligations by $918.2 million, $818.3 million and $671.1 million, respectively. The weighted average extended maturity of those repurchase agreements is 3.4 years, 6.5 years and 3.7 years, respectively.



33
Table of Contents

Collateralized Loan Obligations and Single Asset Securitization

Commercial and Residential Lending Segment

In February 2022, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2022-FL3. On the closing date, the CLO issued $1.0 billion of notes and preferred shares, of which $842.5 million of notes were purchased by third party investors. We retained $82.5 million of notes along with preferred shares with a liquidation preference of $75.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of two years. During the three months ended March 31, 2024, we utilized the reinvestment feature, contributing $6.7 million of additional interests into the CLO.

In July 2021, we contributed into a single asset securitization, STWD 2021-HTS, a previously originated $230.0 million first mortgage and mezzanine loan on a portfolio of 41 extended stay hotels with $210.1 million of third party financing.

In May 2021, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2021-FL2. On the closing date, the CLO issued $1.3 billion of notes and preferred shares, of which $1.1 billion of notes were purchased by third party investors. We retained $70.1 million of notes, along with preferred shares with a liquidation preference of $127.5 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. The reinvestment period expired during 2023 and during the three months ended March 31, 2024, we repaid CLO debt in the amount of $73.5 million.

In August 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2019-FL1. On the closing date, the CLO issued $1.1 billion of notes and preferred shares, of which $936.4 million of notes were purchased by third party investors. We retained $86.6 million of notes, along with preferred shares with a liquidation preference of $77.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allowed us to contribute new loans or participation interests in loans to the CLO in exchange for cash. The reinvestment period expired during 2022 and during the three months ended March 31, 2024, we repaid CLO debt in the amount of $184.2 million.

Infrastructure Lending Segment

In January 2022, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, STWD 2021-SIF2. On the closing date, the CLO issued $500.0 million of notes and preferred shares, of which $410.0 million of notes were purchased by third party investors. We retained preferred shares with a liquidation preference of $90.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years. During the three months ended March 31, 2024, we utilized the reinvestment feature, contributing $17.8 million of additional interests into the CLO.

In April 2021, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, STWD 2021-SIF1. On the closing date, the CLO issued $500.0 million of notes and preferred shares, of which $410.0 million of notes were purchased by third party investors. We retained preferred shares with a liquidation preference of $90.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years. During the three months ended March 31, 2024, we utilized the reinvestment feature, contributing $27.2 million of additional interests into the CLO.

34
Table of Contents

The following table is a summary of our CLOs and our SASB as of March 31, 2024 and December 31, 2023 (amounts in thousands):
March 31, 2024 Count Face
Amount 		Carrying
Value 		Weighted
Average Spread 		Maturity
STWD 2022-FL3
Collateral assets 46 $ 1,000,000 $ 1,007,284
SOFR + 3.49%
(a) August 2026 (b)
Financing 1 840,620 837,805
SOFR + 1.89%
(c) November 2038 (d)
STWD 2021-HTS
Collateral assets 1 210,181 216,750
SOFR + 4.02%
(a) April 2026 (b)
Financing 1 195,576 195,576
SOFR + 2.42%
(c) April 2034 (d)
STWD 2021-FL2
Collateral assets 31 1,206,319 1,216,834
SOFR + 3.81%
(a) April 2026 (b)
Financing 1 988,749 987,167
SOFR + 1.89%
(c) April 2038 (d)
STWD 2019-FL1
Collateral assets 10 550,006 553,096
SOFR + 3.58%
(a) June 2026 (b)
Financing 1 386,381 386,380
SOFR + 1.83%
(c) July 2038 (d)
STWD 2021-SIF2
Collateral assets 28 458,687 514,678
SOFR + 3.80%
(a) January 2028 (b)
Financing 1 410,000 408,393
SOFR + 2.11%
(c) January 2033 (d)
STWD 2021-SIF1
Collateral assets 30 439,322 515,246
SOFR + 3.88%
(a) September 2027 (b)
Financing 1 410,000 408,546
SOFR + 2.42%
(c) April 2032 (d)
Total
Collateral assets $ 3,864,515 $ 4,023,888
Financing $ 3,231,326 $ 3,223,867
December 31, 2023 Count Face
Amount 		Carrying
Value 		Weighted
Average Spread 		Maturity
STWD 2022-FL3
Collateral assets 48 $ 997,569 $ 1,007,532
SOFR + 3.53%
(a) May 2026 (b)
Financing 1 840,620 837,881
SOFR + 1.89%
(c) November 2038 (d)
STWD 2021-HTS
Collateral assets 1 223,193 224,509
SOFR + 3.87%
(a) April 2026 (b)
Financing 1 203,284 203,058
SOFR + 2.82%
(c) April 2034 (d)
STWD 2021-FL2
Collateral assets 34 1,272,585 1,288,165
SOFR + 3.95%
(a) January 2026 (b)
Financing 1 1,065,713 1,063,454
SOFR + 1.85%
(c) April 2038 (d)
STWD 2019-FL1
Collateral assets 14 734,099 739,684
SOFR + 3.51%
(a) May 2025 (b)
Financing 1 570,546 570,546
SOFR + 1.62%
(c) July 2038 (d)
STWD 2021-SIF2
Collateral assets 30 499,401 514,286
SOFR + 3.87%
(a) December 2027 (b)
Financing 1 410,000 408,166
SOFR + 2.11%
(c) January 2033 (d)
STWD 2021-SIF1
Collateral assets 32 499,767 514,594
SOFR + 3.97%
(a) August 2027 (b)
Financing 1 410,000 408,187
SOFR + 2.42%
(c) April 2032 (d)
Total
Collateral assets $ 4,226,614 $ 4,288,770
Financing $ 3,500,163 $ 3,491,292
______________________________________________________________________________________________________________________________
(a)Represents the weighted-average coupon earned on variable rate loans during the respective year-to-date period and excludes loans for which interest income is not recognized. Of the loans financed by the STWD 2021-FL2 CLO as of March 31, 2024, 7% earned fixed-rate weighted average interest of 7.39%. Of the investments financed by the STWD 2021-SIF1 CLO as of March 31, 2024, 2% earned fixed-rate weighted average interest of 5.68%.
(b)Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets.
(c)Represents the weighted-average cost of financing, inclusive of deferred issuance costs.
(d)Repayments of the CLOs and SASB are tied to timing of the related collateral asset repayments. The term of the CLOs and SASB financing obligations represents the legal final maturity date.
35
Table of Contents

We incurred $37.9 million of issuance costs in connection with the CLOs and SASB, which are amortized on an effective yield basis over the estimated life of the CLOs and SASB. For the three months ended March 31, 2024 and 2023, approximately $2.0 million and $2.7 million, respectively, of amortization of deferred financing costs was included in interest expense on our condensed consolidated statements of operations. As of March 31, 2024 and December 31, 2023, our unamortized issuance costs were $7.5 million and $9.5 million, respectively.
The CLOs and SASB are considered VIEs, for which we are deemed the primary beneficiary. We therefore consolidate the CLOs and SASB. Refer to Note 15 for further discussion.
Maturities
Our credit facilities generally require principal to be paid down prior to the facilities' respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The following table sets forth our principal repayments schedule for secured financings 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):
Repurchase
Agreements 		Other Secured
Financing 		CLOs and SASB (a) Total
2024 (remainder of) $ 515,639 $ 634,084 $ 167,665 $ 1,317,388
2025 2,093,167 301,171 941,958 3,336,296
2026 2,938,739 923,618 1,689,436 5,551,793
2027 2,988,663 1,086,335 176,026 4,251,024
2028 774,644 144,203 181,306 1,100,153
Thereafter 207,839 17,388 74,935 300,162
Total $ 9,518,691 $ 3,106,799 $ 3,231,326 $ 15,856,816
______________________________________________________________________________________________________________________
(a)For the CLOs, the above does not assume utilization of their reinvestment features. The SASB does not have a reinvestment feature.
36
Table of Contents

11. Unsecured Senior Notes
The following table is a summary of our unsecured senior notes outstanding as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Coupon
Rate 		Effective
Rate (1) 		Maturity
Date 		Remaining
Period of
Amortization 		Carrying Value at
March 31, 2024 December 31, 2023
2027 Convertible Notes
6.75 % 7.38 % 7/15/2027 3.3 years 380,750 380,750
2024 Senior Notes 3.75 % 3.94 % 12/31/2024 0.8 years 400,000 400,000
2025 Senior Notes 4.75 % (2) 5.04 % 3/15/2025 1.0 year 500,000 500,000
2026 Senior Notes 3.63 % 3.77 % 7/15/2026 2.3 years 400,000 400,000
2027 Senior Notes 4.38 % (3) 4.49 % 1/15/2027 2.8 years 500,000 500,000
2029 Senior Notes
7.25 % (4) 7.37 % 4/1/2029 5.0 years 600,000 -
Total principal amount 2,780,750 2,180,750
Unamortized discount-Convertible Notes (8,040) (8,570)
Unamortized discount-Senior Notes (7,656) (5,445)
Unamortized deferred financing costs (13,388) (7,847)
Total carrying amount $ 2,751,666 $ 2,158,888
______________________________________________________________________________________________________________________
(1)Effective rate includes the effects of underwriter purchase discount.
(2)The coupon on the 2025 Senior Notes is 4.75%. At closing, we swapped $470.0 million of the notes to a floating rate of LIBOR + 2.53%, which was converted to SOFR + 2.53% effective July 2023.
(3)The coupon on the 2027 Senior Notes is 4.375%. At closing, we swapped the notes to a floating rate of SOFR + 2.95%.
(4)The coupon on the 2029 Senior Notes is 7.25%. At closing, we swapped the notes to a floating rate of SOFR + 3.25%.
Our unsecured senior notes contain certain financial tests and covenants. As of March 31, 2024, we were in compliance with all such covenants.
Senior Notes Due 2029
On March 27, 2024, we issued $600.0 million of 7.250% Senior Notes due 2029 (the "2029 Senior Notes"). The 2029 Senior Notes mature on April 1, 2029. Prior to October 1, 2028, we may redeem some or all of the 2029 Notes at a price equal to 100% of the principal amount thereof, plus the applicable "make-whole" premium as of the applicable date of redemption. On and after October 1, 2028, we may redeem some or all of the 2029 Notes at a price equal to 100% of the principal amount thereof. In addition, prior to April 1, 2027, we may redeem up to 40% of the 2029 Notes at the applicable redemption price using the proceeds of certain equity offerings.
Convertible Notes
In July 2023, we issued $380.8 million of 6.750% Convertible Senior Notes due 2027 (the "2027 Convertible Notes") for net proceeds of $371.2 million. The notes mature on July 15, 2027.
We recognized interest expense from our Convertible Notes (including prior convertible notes repaid during 2023) of $7.0 million and $2.9 million during three months ended March 31, 2024 and 2023, respectively.
37
Table of Contents


The following table details the conversion attributes of our Convertible Notes outstanding as of March 31, 2024 (amounts in thousands, except rates):
March 31, 2024
Conversion Conversion
Rate (1) Price (2)
2027 Convertible Notes 48.1783 $ 20.76

(1) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of 2027
Convertible Notes converted, as adjusted in accordance with the indenture governing the 2027 Convertible Notes
(including the applicable supplemental indenture).

(2) As of March 31, 2024, the market price of the Company's common stock was $20.33.

The if-converted value of the 2027 Convertible Notes was less than their principal amount by $7.8 million at March 31, 2024 as the closing market price of the Company's common stock of $20.33 was less than the implicit conversion price of $20.76 per share. The if-converted value of the principal amount of the 2027 Convertible Notes was $372.9 million as of March 31, 2024. As of March 31, 2024, the net carrying amount and fair value of the 2027 Convertible Notes was $372.0 million and $383.1 million, respectively.

Upon conversion of the 2027 Convertible Notes, settlement may be made in common stock, cash, or a combination of both, at the option of the Company.

Conditions for Conversion

Prior to January 15, 2027, the 2027 Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company's common stock is at least 110% of the conversion price of the 2027 Convertible Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the 2027 Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company's common stock during any fiveconsecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company's common stock by more than 10% or (4) certain other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.

On or after January 15, 2027, holders of the 2027 Convertible Notes may convert each of their notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.
38
Table of Contents

12. Loan Securitization/Sale Activities
As described below, we regularly sell loans and notes under various strategies. We evaluate such sales as to whether they meet the criteria for treatment as a sale-legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint and transfer of control.
Loan Securitizations
Within the Investing and Servicing Segment, we originate commercial mortgage loans with the intent to sell these mortgage loans to VIEs for the purposes of securitization. These VIEs then issue CMBS that are collateralized in part by these assets, as well as other assets transferred to the VIE by third parties. Within the Commercial and Residential Lending Segment, we acquire residential loans with the intent to sell these mortgage loans to VIEs for the purpose of securitization. These VIEs then issue RMBS that are collateralized by these assets.
In certain instances, we retain an interest in the CMBS or RMBS VIE and serve as special servicer or servicing administrator for the VIE. In these circumstances, we generally consolidate the VIE into which the loans were sold. The securitizations are subject to optional redemption after a certain period of time or when the pool balance falls below a specified threshold.
The following summarizes the face amount and proceeds of commercial loans securitized for the three months ended March 31, 2024 and 2023 (amounts in thousands):
Commercial Loans
Face Amount Proceeds
For the Three Months Ended March 31,
2024 $ 211,700 $ 218,596
2023 12,196 13,439
There were no residential loans securitized during the three months ended March 31, 2024 and 2023
The securitization of these commercial and residential loans does not result in a discrete gain or loss since they are carried under the fair value option.
Our securitizations have each been structured as bankruptcy-remote entities whose assets are not intended to be available to the creditors of any other party.
Commercial and Residential Loan Sales
Within the Commercial and Residential Lending Segment, we originate or acquire commercial mortgage loans, subsequently selling all or a portion thereof. Typically, our motivation for entering into these transactions is to effectively create leverage on the subordinated position that we will retain and hold for investment. We also may sell certain of our previously-acquired residential loans to third parties outside a securitization.

There were no sales of commercial or residential loans within the Commercial and Residential Lending Segment during the three months ended March 31, 2024 and 2023.
Infrastructure Loan Sales
There were no sales of loans by the Infrastructure Lending Segment during the three months ended March 31, 2024 and 2023.
39
Table of Contents

13. Derivatives and Hedging Activity
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions. Refer to Note 14 to the consolidated financial statements included in our Form 10-K for further discussion of our risk management objectives and policies.
Designated Hedges
The Company does not generally elect to apply the hedge accounting designation to its hedging instruments. As of March 31, 2024 and December 31, 2023, the Company did not have any designated hedges.
Non-designated Hedges and Derivatives
We have entered into the following types of non-designated hedges and derivatives:
•Foreign exchange ("Fx") forwards whereby we agree to buy or sell a specified amount of foreign currency for a specified amount of USD at a future date, economically fixing the USD amounts of foreign denominated cash flows we expect to receive or pay related to certain foreign denominated loan investments;
•Interest rate contracts which hedge a portion of our exposure to changes in interest rates;
•Credit instruments which hedge a portion of our exposure to the credit risk of our commercial loans held-for-sale; and
•Interest rate swap guarantees whereby we guarantee the interest rate swap obligations of certain Infrastructure Lending borrowers. Our interest rate swap guarantees were assumed in connection with the acquisition of the Infrastructure Lending Segment.
The following table summarizes our non-designated derivatives as of March 31, 2024 (notional amounts in thousands):

Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity
Fx contracts - Buy Euros ("EUR") 26 399,300 EUR April 2024 - April 2026
Fx contracts - Buy Pounds Sterling ("GBP") 15 68,963 GBP April 2024 - January 2027
Fx contracts - Buy Australian dollar ("AUD") 10 819,763 AUD April 2024 - October 2026
Fx contracts - Sell EUR 162 838,898 EUR April 2024 - February 2027
Fx contracts - Sell GBP 209 552,574 GBP April 2024 - April 2027
Fx contracts - Sell AUD 140 1,620,052 AUD April 2024 - July 2027
Fx contracts - Sell Swiss Franc ("CHF") 65 20,900 CHF April 2024 - November 2025
Interest rate swaps - Paying fixed rates 60 4,524,605 USD April 2024 - March 2034
Interest rate swaps - Receiving fixed rates 4 1,592,500 USD March 2025 - February 2030
Interest rate caps 4 624,332 USD November 2024 - April 2025
Interest rate caps 1 61,000 GBP April 2024
Credit instruments 3 49,000 USD September 2058 - August 2061
Interest rate swap guarantees 1 98,925 USD June 2025
Total 700

The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 (amounts in thousands):
Fair Value of Derivatives
in an Asset Position (1) as of 		Fair Value of Derivatives
in a Liability Position (2) as of
March 31,
2024
December 31, 2023
March 31,
2024
December 31, 2023
Interest rate contracts $ 24,367 $ 8,899 $ 52,312 $ 48,401
Foreign exchange contracts 58,196 53,979 22,074 54,066
Credit instruments 353 559 261 -
Total derivatives $ 82,916 $ 63,437 $ 74,647 $ 102,467
40
Table of Contents

___________________________________________________
(1)Classified as derivative assets in our condensed consolidated balance sheets.
(2)Classified as derivative liabilities in our condensed consolidated balance sheets.
The table below presents the effect of our derivative financial instruments on the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 (amounts in thousands):

Derivatives Not Designated
as Hedging Instruments 		Location of Gain (Loss)
Recognized in Income
Amount of Gain (Loss)
Recognized in Income for the
Three Months Ended March 31,
2024 2023
Interest rate contracts Gain (loss) on derivative financial instruments, net $ 54,298 $ (22,950)
Foreign exchange contracts Gain (loss) on derivative financial instruments, net 48,123 (10,344)
Credit instruments Gain (loss) on derivative financial instruments, net (482) 466
$ 101,939 $ (32,828)
14. Offsetting Assets and Liabilities
The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet-Offsetting, which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands):
(ii)
Gross Amounts
Offset in the
Statement of
Financial Position 		(iii) = (i) - (ii)
Net Amounts
Presented in
the Statement of
Financial Position 		(iv)
Gross Amounts Not
Offset in the Statement
of Financial Position
(i)
Gross Amounts
Recognized 		Financial
Instruments 		Cash Collateral
Received / Pledged 		(v) = (iii) - (iv)
Net Amount
As of March 31, 2024
Derivative assets $ 82,916 $ - $ 82,916 $ 40,098 $ - $ 42,818
Derivative liabilities $ 74,647 $ - $ 74,647 $ 40,098 $ 34,549 $ -
Repurchase agreements 9,518,691 - 9,518,691 9,518,691 - -
$ 9,593,338 $ - $ 9,593,338 $ 9,558,789 $ 34,549 $ -
As of December 31, 2023
Derivative assets $ 63,437 $ - $ 63,437 $ 41,341 $ - $ 22,096
Derivative liabilities $ 102,467 $ - $ 102,467 $ 41,340 $ 61,127 $ -
Repurchase agreements 10,652,359 - 10,652,359 10,652,359 - -
$ 10,754,826 $ - $ 10,754,826 $ 10,693,699 $ 61,127 $ -
15. Variable Interest Entities
Investment Securities
As discussed in Note 2, we evaluate all of our investments and other interests in entities for consolidation, including our investments in CMBS, RMBS and our retained interests in securitization transactions we initiated, all of which are generally considered to be variable interests in VIEs.
Securitization VIEs consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to us as the primary beneficiary. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, a portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.
41
Table of Contents

VIEs in which we are the Primary Beneficiary
The inclusion of the assets and liabilities of securitization VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of securitization VIEs is generally limited to our investment in these entities. We are not obligated to provide, nor have we provided, any financial support for any of these consolidated structures.
As discussed in Note 10, we have refinanced various pools of our commercial and infrastructure loans held-for-investment through five CLOs and one SASB, which are considered to be VIEs. We are the primary beneficiary of, and therefore consolidate, the CLOs and SASB in our financial statements as we have both (i) the power to direct the activities in our role as collateral manager, collateral advisor, or controlling class representative that most significantly impact the CLOs' and SASB's economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the CLOs and SASB that could be potentially significant through the subordinate interests we own.
The following table details the assets and liabilities of our consolidated CLOs and SASB as of March 31, 2024 and December 31, 2023 (amounts in thousands):
March 31, 2024 December 31, 2023
Assets:
Cash and cash equivalents $ 136,858 $ 33,175
Loans held-for-investment 3,847,992 4,210,097
Investment securities 9,326 9,946
Accrued interest receivable 24,408 26,355
Other assets 5,304 9,197
Total Assets $ 4,023,888 $ 4,288,770
Liabilities
Accounts payable, accrued expenses and other liabilities $ 20,100 $ 21,174
Collateralized loan obligations and single asset securitization, net 3,223,867 3,491,292
Total Liabilities $ 3,243,967 $ 3,512,466
Assets held by the CLOs and SASB are restricted and can be used only to settle obligations of the CLOs and SASB, including the subordinate interests owned by us. The liabilities of the CLOs and SASB are non-recourse to us and can only be satisfied from the assets of the CLOs and SASB.
We also hold controlling interests in other non-securitization entities that are considered VIEs. The Woodstar Fund, Woodstar Feeder Fund, L.P. and one of the Woodstar Fund's indirect investees, SPT Dolphin Intermediate LLC ("SPT Dolphin"), the entity which holds the Woodstar II Portfolio, are each VIEs because the third party interest holders do not carry kick-out rights or substantive participating rights. We were deemed to be the primary beneficiary of those VIEs because we possess both the power to direct the activities of the VIEs that most significantly impact their economic performance and a significant economic interest in each entity. The Woodstar Fund had total assets of $2.0 billion, including its indirect investment in SPT Dolphin, and no significant liabilities as of March 31, 2024. As of March 31, 2024, Woodstar Feeder Fund, L.P. and its consolidated subsidiary which is also considered a VIE, Woodstar Feeder REIT, LLC, had a $0.6 billion investment in the Woodstar Fund, had no significant liabilities and had temporary equity of $0.4 billion consisting of the contingently redeemable non-controlling interests of the third party investors (see Note 17).
We also hold a 51% controlling interest in a joint venture (the "CMBS JV") within our Investing and Servicing Segment, which is considered a VIE because the third party interest holder does not carry kick-out rights or substantive participating rights. We are deemed the primary beneficiary of the CMBS JV. This VIE had total assets of $303.1 million and liabilities of $66.9 million as of March 31, 2024. Refer to Note 17 for further discussion.
In addition to the above non-securitization entities, we have smaller VIEs with total assets of $48.0 million and liabilities of $10.2 million as of March 31, 2024.
VIEs in which we are not the Primary Beneficiary
In certain instances, we hold a variable interest in a VIE in the form of CMBS, but either (i) we are not appointed, or do not serve as, special servicer or servicing administrator or (ii) an unrelated third party has the rights to unilaterally remove us as special servicer without cause. In these instances, we do not have the power to direct activities that most significantly impact
42
Table of Contents

the VIE's economic performance. In other cases, the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant. For these structures, we are not deemed to be the primary beneficiary of the VIE, and we do not consolidate these VIEs.
As noted above, we are not obligated to provide, nor have we provided, any financial support for any of our securitization VIEs, whether or not we are deemed to be the primary beneficiary. As such, the risk associated with our involvement in these VIEs is limited to the carrying value of our investment in the entity. As of March 31, 2024, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $19.5 million on a fair value basis.
As of March 31, 2024, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances, excluding the notional value of interest-only securities, of $3.9 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations.
We also hold passive non-controlling interests in certain unconsolidated entities that are considered VIEs. We are not the primary beneficiaries of these VIEs as we do not possess the power to direct the activities of the VIEs that most significantly impact their economic performance and therefore report our interests, which totaled $0.8 million as of March 31, 2024, within investments in unconsolidated entities on our condensed consolidated balance sheet. Our maximum risk of loss is limited to our carrying value of the investments.
16. Related-Party Transactions
Management Agreement
We are party to a management agreement (the "Management Agreement") with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager's personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm's-length basis. Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement.
Base Management Fee.For the three months ended March 31, 2024 and 2023, approximately $21.9 million and $21.8 million, respectively, was incurred for base management fees. As of both March 31, 2024 and December 31, 2023, there were $21.9 million of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets.
Incentive Fee.For the three months ended March 31, 2024 and 2023, approximately $19.1 million and $12.4 million, respectively, was incurred for incentive fees. As of March 31, 2024 and December 31, 2023, there were $19.1 million and $19.5 million, respectively, of unpaid incentive fees included in related-party payable in our condensed consolidated balance sheets.
Expense Reimbursement.For the three months ended March 31, 2024 and 2023, approximately $0.5 million and $1.7 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. As of March 31, 2024 and December 31, 2023, there were $3.2 million and $3.4 million, respectively, of unpaid reimbursable executive compensation and other expenses included in related-party payable in our condensed consolidated balance sheets.
Equity Awards.In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the three months ended March 31, 2024 and 2023, we granted 924,092 and 226,955 RSAs, respectively, at grant date fair values of $18.8 million and $4.3 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.5 million and $2.2 million during the three months ended March 31, 2024 and 2023, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. These shares generally vest over a three-year period. Compensation expense related to the ESPP (refer to Note 17) for employees of affiliates of our Manager were not material during the three months ended March 31, 2024 and 2023, and are reflected in general and administrative expenses in our condensed consolidated statements of operations.
43
Table of Contents

Manager Equity Plan
In April 2022, the Company's shareholders approved the Starwood Property Trust, Inc. 2022 Manager Equity Plan (the "2022 Manager Equity Plan") which replaces the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the "2017 Manager Equity Plan"). In March 2024, we granted 1,300,000 RSUs to our Manager under the 2022 Manager Equity Plan. In November 2022, we granted 1,500,000 RSUs to our Manager under the 2022 Manager Equity Plan. In November 2020, we granted 1,800,000 RSUs to our Manager under the 2017 Manager Equity Plan. In connection with these grants and prior similar grants, we recognized share-based compensation expense of $4.8 million and $5.1 million within management fees in our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023, respectively. Refer to Note 17 for further discussion.
Investments in Loans and Securities
In March 2022, we originated a new loan on the development and recapitalization of luxury rental cabins with a total commitment of $200.0 million, of which $149.0 million was outstanding as of March 31, 2024. The loan bears interest at SOFR + 6.50% plus fees and has a term of 24 months with threeone-year extension options. Certain members of our executive team who also serve on our board of directors own minority equity interests in the borrower. In July 2023, we agreed to a 10-month 300 bps interest payment deferral, which amounted to $3.4 million as of March 31, 2024 . In January 2024, the interest payment deferral period was extended to December 2024.
In December 2012, the Company acquired 9,140,000 ordinary shares in SEREF, a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange, for approximately $14.7 million, which equated to approximately 4% ownership of SEREF. During the three months ended March 31, 2024, 1,005,348 shares were redeemed by SEREF, for proceeds of $1.3 million, leaving 6,242,339 shares held as of March 31, 2024. There were no shares redeemed during the three months ended March 31, 2023. As of March 31, 2024, our shares represent an approximate 2.3% interest in SEREF. Refer to Note 5 for additional details.

We hold a 0.72% equity interest in a data center business in Ireland that had a carrying value of $7.3 million as of March 31, 2024. An investment fund and certain other entities affiliated with our Manager exercise a combined 50% voting interest in this entity. Refer to Note 8 for additional details.
Lease Arrangements
In March 2020, we entered into an office lease agreement with an entity which is controlled by our Chairman and CEO through majority equity ownership of the entity. The leased premises serve as our new Miami Beach office following the expiration of our former lease in Miami Beach. The lease, as amended in September 2022, is for 64,424 square feet of office space, commenced July 1, 2022 and has an initial term of 15 years from the monthly lease payment commencement date of November 1, 2022. The lease payments are based on an annual base rate of $52.00 per square foot that increases by 3% each November, plus our pro rata share of building operating expenses. Prior to the execution of this lease, we engaged an independent third party leasing firm and external counsel to advise the independent directors of our board of directors on market terms for the lease. The terms of the lease and subsequent amendment were approved by our independent directors. In April 2020, we provided a $1.9 million cash security deposit to the landlord. During the three months ended March 31, 2024 and 2023, we made payments to the landlord under the terms of the lease of $1.6 million and $1.4 million, respectively, for rent, parking and our pro rata share of building operating expenses. During the three months ended March 31, 2024 and 2023, we recognized $1.7 million and $1.6 million, respectively, of expenses with respect to this lease within general and administrative expenses in our condensed consolidated statements of operations.
Other Related-Party Arrangements
Highmark Residential ("Highmark"), an affiliate of our Manager, provides property management services for properties within our Woodstar I and Woodstar II Portfolios. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During the three months ended March 31, 2024 and 2023, property management fees to Highmark of $1.6 million and $1.5 million, respectively, were recognized within our Woodstar Portfolios.

Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements.
44
Table of Contents

17. Stockholders' Equity and Non-Controlling Interests
During the three months ended March 31, 2024, our board of directors declared the following dividends:

Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency
3/15/24 3/29/24 3/27/24 4/15/24 $ 0.48 Quarterly
ATM Agreement
In May 2022, we entered into a Starwood Property Trust, Inc. Common Stock Sales Agreement (the "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. Sales of shares under the ATM Agreement are made by means of ordinary brokers' transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale or at negotiated prices. There were no shares issued under the ATM Agreement during the three months ended March 31, 2024 and 2023.
Dividend Reinvestment and Direct Stock Purchase Plan
During the three months ended March 31, 2024 and 2023, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the "DRIP Plan") were not material.
Employee Stock Purchase Plan
In April 2022, the Company's shareholders approved the ESPP which allows eligible employees to purchase common stock of the Company at a discounted purchase price. The discounted purchase price of a share of the Company's common stock is 85% of the fair market value (closing market price) at the lower of the beginning or the end of the quarterly offering period. Participants may purchase shares not exceeding an aggregate fair market value of $25,000 in any calendar year. The maximum aggregate number of shares subject to issuance in accordance with the ESPP is 2,000,000 shares.
During the three months ended March 31, 2024 and 2023, 66,315 and 65,026 shares, respectively, of common stock were purchased by participants at a weighted average discounted purchase price of $17.09 and $14.91 per share, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized $0.3 million and $0.2 million, respectively, of compensation expense related to its ESPP based on the estimated fair value of the discounted purchase options granted to the participants as of the beginning of the quarterly offering period determined using the Black-Scholes option pricing model.
As of March 31, 2024, there were 1.7 million shares of common stock available for future issuance through the ESPP.

Equity Incentive Plans
In April 2022, the Company's shareholders approved the 2022 Manager Equity Plan and the Starwood Property Trust, Inc. 2022 Equity Plan (the "2022 Equity Plan"), which allow for the issuance of up to 18,700,000 stock options, stock appreciation rights, RSAs, RSUs or other equity-based awards or any combination thereof to the Manager, directors, employees, consultants or any other party providing services to the Company. The 2022 Manager Equity Plan succeeds and replaces the 2017 Manager Equity Plan and the 2022 Equity Plan succeeds and replaces the Starwood Property Trust, Inc. 2017 Equity Plan (the "2017 Equity Plan").
The table below summarizes our share awards granted or vested under the 2017 and 2022 Manager Equity Plans during the three months ended March 31, 2024 and 2023 (dollar amounts in thousands):
Grant Date Type Amount Granted Grant Date Fair Value Vesting Period
March 2024 RSU 1,300,000 $ 26,104 3 years
November 2022 RSU 1,500,000 $ 31,605 3 years
November 2020 RSU 1,800,000 $ 30,078 3 years
45
Table of Contents

Schedule of Non-Vested Shares and Share Equivalents (1)

Equity Plan
Manager
Equity Plan 		Total Weighted Average
Grant Date Fair
Value (per share)
Balance as of January 1, 2024
2,571,728 875,000 3,446,728 $ 21.08
Granted 1,785,570 1,300,000 3,085,570 20.23
Vested (1,623,734) (233,333) (1,857,067) 21.21
Forfeited (3,731) - (3,731) 21.69
Balance as of March 31, 2024 2,729,833 1,941,667 4,671,500 20.47
(1) Equity-based award activity for awards granted under the 2017 and 2022 Equity Plans is reflected within the Equity Plan column, and for awards granted under the 2017 and 2022 Manager Equity Plans, within the Manager Equity Plan column.
As of March 31, 2024, there were 13.4 million shares of common stock available for future grants under the 2022 Manager Equity Plan and the 2022 Equity Plan.
Non-Controlling Interests in Consolidated Subsidiaries
As discussed in Note 2, on November 5, 2021 we sold a 20.6% non-controlling interest in the Woodstar Fund to third party investors for net cash proceeds of $214.2 million. Under the Woodstar Fund operating agreement, such interests are contingently redeemable by us, at the option of the interest holder, for cash at liquidation fair value if any assets remain upon termination of the Woodstar Fund. The Woodstar Fund operating agreement specifies an eight-year term with twoone-year extension options, the first at our option and the second subject to consent of an advisory committee representing the non-controlling interest holders. Accordingly, these contingently redeemable non-controlling interests have been classified as "Temporary Equity" in our condensed consolidated balance sheets and represent the fair value of the Woodstar Fund's net assets allocable to those interests. During the three months ended March 31, 2024 and 2023, net income attributable to these non-controlling interests was $1.6 million and $2.3 million, respectively.
In connection with our Woodstar II Portfolio acquisitions, we issued 10.2 million Class A Units in our subsidiary, SPT Dolphin, and rights to receive an additional 1.9 million Class A Units if certain contingent events occur. As of March 31, 2024, all of the 1.9 million contingent Class A Units were issued. The Class A Units are redeemable for consideration equal to the current share price of the Company's common stock on a one-for-one basis, with the consideration paid in either cash or the Company's common stock, at the determination of the Company. There were 9.7 million Class A Units outstanding as of March 31, 2024. The outstanding Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our condensed consolidated balance sheets, the balance of which was $207.1 million as of both March 31, 2024 and December 31, 2023.
To the extent SPT Dolphin has sufficient cash available, the Class A Units earn a preferred return indexed to the dividend rate of the Company's common stock. Any distributions made pursuant to this waterfall are recognized within net income attributable to non-controlling interests in our condensed consolidated statements of operations. During both the three months ended March 31, 2024 and 2023, we recognized net income attributable to non-controlling interests of $4.7 million associated with these Class A Units.
As discussed in Note 15, we hold a 51% controlling interest in the CMBS JV within our Investing and Servicing Segment. Because the CMBS JV is deemed a VIE for which we are the primary beneficiary, the 49% interest of our joint venture partner is reflected as a non-controlling interest in consolidated subsidiaries on our condensed consolidated balance sheets, and any net income attributable to this 49% joint venture interest is reflected within net income attributable to non-controlling interests in our condensed consolidated statements of operations. The non-controlling interests in the CMBS JV were $124.9 million and $129.2 million as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, net (loss) income attributable to these non-controlling interests was $(1.0) million and $0.7 million, respectively.
46
Table of Contents

18. Earnings per Share
The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts):
For the Three Months Ended
March 31,
2024 2023
Basic Earnings
Income attributable to STWD common stockholders $ 154,332 $ 51,974
Less: Income attributable to participating shares not already deducted as non-controlling interests (2,576) (1,811)
Basic earnings $ 151,756 $ 50,163
Diluted Earnings
Income attributable to STWD common stockholders $ 154,332 $ 51,974
Less: Income attributable to participating shares not already deducted as non-controlling interests (2,576) (1,811)
Add: Interest expense on Convertible Notes 7,005 *
Add: Undistributed earnings to participating shares 68 -
Less: Undistributed earnings reallocated to participating shares (65) -
Diluted earnings $ 158,764 $ 50,163
Number of Shares:
Basic - Average shares outstanding 311,827 308,408
Effect of dilutive securities - Convertible Notes 18,344 *
Effect of dilutive securities - Contingently issuable shares 469 357
Effect of dilutive securities - Unvested non-participating shares 200 231
Diluted - Average shares outstanding 330,840 308,996
Earnings Per Share Attributable to STWD Common Stockholders:
Basic $ 0.49 $ 0.16
Diluted $ 0.48 $ 0.16
___________________________________________________
* Our Convertible Notes were not dilutive for the three months ended March 31, 2023.
As of March 31, 2024 and 2023, participating shares of 13.8 million and 13.5 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Such participating shares at March 31, 2024 and 2023 included 9.7 million and 9.8 million potential shares, respectively, of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 17.
47
Table of Contents

19. Accumulated Other Comprehensive Income
The changes in AOCI by component are as follows (amounts in thousands):
Cumulative
Unrealized Gain
(Loss) on
Available-for-
Sale Securities
Three Months Ended March 31, 2024
Balance at January 1, 2024 $ 15,352
OCI before reclassifications (1,291)
Amounts reclassified from AOCI -
Net period OCI (1,291)
Balance at March 31, 2024 $ 14,061
Three Months Ended March 31, 2023
Balance at January 1, 2023 $ 20,955
OCI before reclassifications (1,104)
Amounts reclassified from AOCI -
Net period OCI (1,104)
Balance at March 31, 2023 $ 19,851


48
Table of Contents

20. Fair Value
GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:
Level I-Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level II-Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.
Level III-Inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
Valuation Process
We have valuation control processes in place to validate the fair value of the Company's financial assets and liabilities measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable.
Pricing Verification-We use recently executed transactions, other observable market data such as exchange data, broker/dealer quotes, third party pricing vendors and aggregation services for validating the fair values generated using valuation models. Pricing data provided by approved external sources is evaluated using a number of approaches; for example, by corroborating the external sources' prices to executed trades, analyzing the methodology and assumptions used by the external source to generate a price and/or by evaluating how active the third party pricing source (or originating sources used by the third party pricing source) is in the market.
Unobservable Inputs-Where inputs are not observable, we review the appropriateness of the proposed valuation methodology to ensure it is consistent with how a market participant would arrive at the unobservable input. The valuation methodologies utilized in the absence of observable inputs may include extrapolation techniques and the use of comparable observable inputs.
Any changes to the valuation methodology will be reviewed by our management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while we anticipate that our valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value could result in a different estimate of fair value at the reporting date.
Fair Value on a Recurring Basis
We determine the fair value of our financial assets and liabilities measured at fair value on a recurring basis as follows:
Loans held-for-sale, commercial
We measure the fair value of our commercial mortgage loans held-for-sale using a discounted cash flow analysis unless observable market data (i.e., securitized pricing) is available. A discounted cash flow analysis requires management to make estimates regarding future interest rates and credit spreads. The most significant of these inputs relates to credit spreads and is unobservable. Thus, we have determined that the fair values of mortgage loans valued using a discounted cash flow analysis should be classified in Level III of the fair value hierarchy, while mortgage loans valued using securitized pricing should be classified in Level II of the fair value hierarchy. Mortgage loans classified in Level III are transferred to Level II if securitized pricing becomes available.
49
Table of Contents

Loans held-for-sale, residential
We measure the fair value of our residential loans held-for-sale based on the net present value of expected future cash flows using a combination of observable and unobservable inputs. Observable market participant assumptions include pricing related to trades of residential loans with similar characteristics. Unobservable inputs include the expectation of future cash flows, which involves judgments about the underlying collateral, the creditworthiness of the borrower, estimated prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs, these loans have been classified within Level III.
RMBS
RMBS are valued utilizing observable and unobservable market inputs. The observable market inputs include recent transactions, broker quotes and vendor prices ("market data"). However, given the implied price dispersion amongst the market data, the fair value determination for RMBS has also utilized significant unobservable inputs in discounted cash flow models including prepayments, default and severity estimates based on the recent performance of the collateral, the underlying collateral characteristics, industry trends, as well as expectations of macroeconomic events (e.g., housing price curves, interest rate curves, etc.). At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs these securities have been classified within Level III.
CMBS
CMBS are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar securities and the spreads used in the prior valuation. We obtain current market spread information where available and use this information in evaluating and validating the market price of all CMBS. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are classified in either Level II or Level III of the fair value hierarchy. CMBS may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the CMBS become or cease to be observable.
Equity security
The equity security is publicly registered and traded in the U.S. and its market price is listed on the London Stock Exchange. The security has been classified within Level I.
Woodstar Fund Investments
The fair value of investments held by the Woodstar Fund is determined based on observable and unobservable market inputs. The initial fair value of the Woodstar Fund's investments at its November 5, 2021 establishment date was determined by reference to the purchase price paid by third party investors, which was consistent with both a recent external appraisal as well as our extensive marketing efforts to sell interests in the Woodstar Fund, plus working capital. The fair value of the Woodstar Fund's investments as of December 31, 2023 was determined by reference to an external appraisal as of that date.

For the properties, the third party appraisals applied the income capitalization approach with corroborative support from the sales comparison approach. The cost approach was not employed, as it is typically not emphasized by potential investors in the multifamily affordable housing sector. The income capitalization approach estimates an income stream for a property over a 10-year period and discounts this income plus a reversion (presumed sale) into a present value at a risk adjusted discount rate. Terminal capitalization rates and discount rates utilized in this approach are derived from market transactions as well as other financial and industry data.

For secured financing, we discounted the contractual cash flows at the interest rate at which such arrangements would bear if executed in the current market. The fair value of investment level working capital is assumed to approximate carrying value due to its primarily short-term monetary nature. The fair value of interest rate derivatives is determined using the methodology described in the Derivatives discussion below.

Internal valuations at interim quarter ends, including March 31, 2024, are prepared by management. The valuation of properties is based on a direct income capitalization approach, whereby a direct capitalization market rate is applied to annualized in-place net operating income at the portfolio level. The direct capitalization rate is initially calibrated to the
50
Table of Contents

implied rate from the latest appraisal and adjusted for subsequent changes in current market capitalization rates for sales of comparable multifamily properties. The valuations of secured financing agreements, working capital and interest rate derivatives are consistent with the methodologies described in the paragraph above.

Given the significance of the unobservable inputs used in the respective valuations, the Woodstar Fund's investments have been classified within Level III of the fair value hierarchy.
Domestic servicing rights
The fair value of this intangible is determined using discounted cash flow modeling techniques which require management to make estimates regarding future net servicing cash flows, including forecasted loan defeasance, control migration, delinquency and anticipated maturity defaults which are calculated assuming a debt yield at which default occurs. Since the most significant of these inputs are unobservable, we have determined that the fair values of this intangible in its entirety should be classified in Level III of the fair value hierarchy.
Derivatives
The valuation of derivative contracts are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market based inputs, including interest rate curves, spot and market forward points and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty's non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
The valuation of over the counter derivatives are determined using discounted cash flows based on Overnight Index Swap ("OIS") rates. Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value. Uncollateralized or partially collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a LIBOR or SOFR OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. For credit instruments, fair value is determined based on changes in the relevant indices from the date of initiation of the instrument to the reporting date, as these changes determine the amount of any future cash settlement between us and the counterparty. These indices are considered Level II inputs as they are directly observable.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level II of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level III inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of March 31, 2024 and December 31, 2023, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level II of the fair value hierarchy.
Liabilities of consolidated VIEs
Our consolidated VIE liabilities generally represent bonds that are not owned by us. The majority of these are either traded in the marketplace or can be analogized to similar securities that are traded in the marketplace. For these liabilities, pricing is considered to be Level II, where the valuation is based upon quoted prices for similar instruments traded in active markets. We generally utilize third party pricing service providers for valuing these liabilities. In order to determine whether to utilize the valuations provided by third parties, we conduct an ongoing evaluation of their valuation methodologies and processes, as well as a review of the individual valuations themselves. In evaluating third party pricing for reasonableness, we consider a variety of factors, including market transaction information for the particular bond, market transaction information for bonds within the same trust, market transaction information for similar bonds, the bond's ratings and the bond's subordination levels.
51
Table of Contents

For the minority portion of our consolidated VIE liabilities which consist of unrated or non-investment grade bonds that are not owned by us, pricing may be either Level II or Level III. If independent third party pricing similar to that noted above is available, we consider the valuation to be Level II. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and we consider the valuation to be Level III. For VIE liabilities classified as Level III, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. VIE liabilities may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the VIE liabilities become or cease to be observable.
Assets of consolidated VIEs
The securitization VIEs in which we invest are "static"; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets of the VIE, we maximize the use of observable inputs over unobservable inputs. The individual assets of a VIE are inherently incapable of precise measurement given their illiquid nature and the limitations on available information related to these assets. Because our methodology for valuing these assets does not value the individual assets of a VIE, but rather uses the value of the VIE liabilities as an indicator of the fair value of VIE assets as a whole, we have determined that our valuations of VIE assets in their entirety should be classified in Level III of the fair value hierarchy.
Fair Value on a Nonrecurring Basis
We determine the fair value of our financial assets and liabilities measured at fair value on a nonrecurring basis as follows:
Loans held-for-sale, infrastructure
We measure the fair value of infrastructure loans held-for-sale, which are carried at the lower of amortized cost or fair value, utilizing bids or purchase agreements received from third parties to acquire these assets. As these bids or purchase agreements represent quoted market prices, we have determined that the fair value of these assets would be classified in Level I of the fair value hierarchy.
Investments in unconsolidated entities, other equity investments
Our other equity investments set forth in Note 8 do not have readily determinable fair values. Therefore, we have elected the fair value practicability exception under ASC 321, Equity Securities, whereby we measure those investments within its scope at cost, less any impairment, plus or minus observable price changes from identical or similar investments of the same issuer. As such price changes represent observable market data, the fair value of the specific investments affected would be classified in Level II of the fair value hierarchy as of the date of the observable price change.
Fair Value Only Disclosed
We determine the fair value of our financial instruments and assets where fair value is disclosed as follows:
Loans held-for-investment
We estimate the fair values of our loans not carried at fair value on a recurring basis by discounting their expected cash flows at a rate we estimate would be demanded by the market participants that are most likely to buy our loans. The expected cash flows used are generally the same as those used to calculate our level yield income in the financial statements. Since these inputs are unobservable, we have determined that the fair value of these loans in their entirety would be classified in Level III of the fair value hierarchy.
HTM debt securities
We estimate the fair value of our mandatorily redeemable preferred equity interests in commercial real estate companies and infrastructure bonds using the same methodology described for our loans held-for-investment. We estimate the fair value of our HTM CMBS using the same methodology described for our CMBS carried at fair value on a recurring basis.
52
Table of Contents

Secured financing agreements, CLOs and SASB
The fair value of the secured financing agreements, CLOs and SASB are determined by discounting the contractual cash flows at the interest rate we estimate such arrangements would bear if executed in the current market. We have determined that our valuation of these instruments should be classified in Level III of the fair value hierarchy.
Unsecured senior notes
The fair value of our unsecured senior notes is determined based on the last available bid price for the respective notes in the current market. As these prices represent observable market data, we have determined that the fair value of these instruments would be classified in Level II of the fair value hierarchy.
Fair Value Disclosures
The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the consolidated balance sheets by their level in the fair value hierarchy as of March 31, 2024 and December 31, 2023 (amounts in thousands):
March 31, 2024
Total Level I Level II Level III
Financial Assets:
Loans under fair value option $ 2,642,219 $ - $ - $ 2,642,219
RMBS 100,319 - - 100,319
CMBS 19,486 - - 19,486
Equity security 7,265 7,265 - -
Woodstar Fund investments 2,008,937 - - 2,008,937
Domestic servicing rights 19,612 - - 19,612
Derivative assets 82,916 - 82,916 -
VIE assets 41,633,853 - - 41,633,853
Total $ 46,514,607 $ 7,265 $ 82,916 $ 46,424,426
Financial Liabilities:
Derivative liabilities $ 74,647 $ - $ 74,647 $ -
VIE liabilities 40,065,423 - 34,706,906 5,358,517
Total $ 40,140,070 $ - $ 34,781,553 $ 5,358,517

December 31, 2023
Total Level I Level II Level III
Financial Assets:
Loans under fair value option $ 2,645,637 $ - $ - $ 2,645,637
RMBS 102,368 - - 102,368
CMBS 18,600 - - 18,600
Equity security 8,340 8,340 - -
Woodstar Fund investments 2,012,833 - - 2,012,833
Domestic servicing rights 19,384 - - 19,384
Derivative assets 63,437 - 63,437 -
VIE assets 43,786,356 - - 43,786,356
Total $ 48,656,955 $ 8,340 $ 63,437 $ 48,585,178
Financial Liabilities:
Derivative liabilities $ 102,467 $ - $ 102,467 $ -
VIE liabilities 42,175,734 - 36,570,938 5,604,796
Total $ 42,278,201 $ - $ 36,673,405 $ 5,604,796
53
Table of Contents

The changes in financial assets and liabilities classified as Level III are as follows for the three months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended March 31, 2024
Loans at
Fair Value 		RMBS CMBS Woodstar
Fund Investments 		Domestic
Servicing
Rights 		VIE Assets VIE
Liabilities 		Total
January 1, 2024 balance
$ 2,645,637 $ 102,368 $ 18,600 $ 2,012,833 $ 19,384 $ 43,786,356 $ (5,604,796) $ 42,980,382
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale (29,013) - 607 (3,896) 228 (1,530,426) 112,113 (1,450,387)
Net accretion - 1,167 - - - - - 1,167
Included in OCI - (1,291) - - - - - (1,291)
Purchases / Originations 289,508 - - - - - - 289,508
Sales (218,597) - - - - - - (218,597)
Issuances - - - - - - (3,166) (3,166)
Cash repayments / receipts (45,316) (1,925) (63) - - - (3,138) (50,442)
Transfers into Level III - - - - - - (465,410) (465,410)
Transfers out of Level III - - - - - - 601,090 601,090
Deconsolidation of VIEs - - 342 - - (622,077) 4,790 (616,945)
March 31, 2024 balance
$ 2,642,219 $ 100,319 $ 19,486 $ 2,008,937 $ 19,612 $ 41,633,853 $ (5,358,517) $ 41,065,909
Amount of unrealized gains (losses) attributable to assets still held at March 31, 2024:
Included in earnings $ (40,815) $ 1,167 $ 949 $ (3,896) $ 228 $ (1,530,426) $ 112,113 $ (1,460,680)
Included in OCI $ - $ (1,291) $ - $ - $ - $ - $ - $ (1,291)
Three Months Ended March 31, 2023
Loans at
Fair Value 		RMBS CMBS Woodstar Fund Investments Domestic
Servicing
Rights 		VIE Assets VIE
Liabilities 		Total
January 1, 2023 balance
$ 2,784,594 $ 113,386 $ 19,108 $ 1,761,002 $ 17,790 $ 52,453,041 $ (5,505,943) $ 51,642,978
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale 8,901 - (19) 1,160 304 (1,926,651) 153,053 (1,763,252)
Net accretion - 1,222 - - - - - 1,222
Included in OCI - (1,104) - - - - - (1,104)
Purchases / Originations 69,200 - - - - - - 69,200
Sales (13,439) - - - - - - (13,439)
Cash repayments / receipts (38,367) (2,435) (144) - - - (1,109) (42,055)
Transfers out of Level III - - - - - - 520,459 520,459
March 31, 2023 balance
$ 2,810,889 $ 111,069 $ 18,945 $ 1,762,162 $ 18,094 $ 50,526,390 $ (4,833,540) $ 50,414,009
Amount of unrealized gains (losses) attributable to assets still held at March 31, 2023:
Included in earnings $ 6,205 $ 1,222 $ (19) $ 1,160 $ 304 $ (1,926,651) $ 153,053 $ (1,764,726)
Included in OCI $ - $ (1,104) $ - $ - $ - $ - $ - $ (1,104)
Amounts were transferred from Level II to Level III due to a decrease in the observable relevant market activity and amounts were transferred from Level III to Level II due to an increase in the observable relevant market activity.
54
Table of Contents

The following table presents the fair values of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands):
March 31, 2024 December 31, 2023
Carrying
Value 		Fair
Value 		Carrying
Value 		Fair
Value
Financial assets not carried at fair value:
Loans $ 16,654,011 $ 16,684,966 $ 17,574,249 $ 17,483,058
HTM debt securities 589,003 563,963 606,254 581,160
Financial liabilities not carried at fair value:
Secured financing agreements, CLOs and SASB (a)
$ 15,780,354 $ 15,726,523 $ 17,552,979 $ 17,466,172
Unsecured senior notes 2,751,666 2,721,859 2,158,888 2,128,835
__________________________________________________

(a)As of December 31, 2023, includes debt related to properties held-for-sale.
The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):
Carrying Value at
March 31, 2024
Valuation
Technique 		Unobservable
Input 		Range (Weighted Average) as of (1)
March 31, 2024 December 31, 2023
Loans under fair value option $ 2,642,219 Discounted cash flow, market pricing Coupon (d)
2.8% - 10.1% (4.6%)
2.8% - 9.9% (4.5%)
Remaining contractual term (d)
4.0 - 38.3 years (26.5 years)
4.3 - 38.5 years (27.4 years)
FICO score (a)
585 - 900 (749)
585 - 900 (749)
LTV (b)
2% - 93% (65%)
5% - 140% (68%)
Purchase price (d)
80.0% - 106.8% (101.3%)
80.0% - 108.6% (101.4%)
RMBS 100,319 Discounted cash flow Constant prepayment rate (a)
2.2% - 9.1% (4.6%)
2.9% - 9.6% (5.2%)
Constant default rate (b)
1.0% - 4.1% (1.7%)
1.0% - 4.2% (1.7%)
Loss severity (b)
0% - 63% (13%) (f)
0% - 99% (17%) (f)
Delinquency rate (c)
9% - 24% (14%)
8% - 25% (14%)
Servicer advances (a)
27% - 79% (51%)
30% - 78% (51%)
Annual coupon deterioration (b)
0% - 0.6% (0.1%)
0% - 1.3% (0.1%)
Putback amount per projected total collateral loss (e)
0% - 8% (0.5%)
0% - 8% (0.5%)
CMBS 19,486 Discounted cash flow Yield (b)
0% - 74.8% (11.1%)
0% - 540.1% (10.6%)
Duration (c)
0 - 6.4 years (2.3 years)
0 - 6.7 years (2.4 years)
Woodstar Fund investments 2,008,937 Discounted cash flow Discount rate - properties (b) N/A
6.3% - 7.0% (6.7%)
Discount rate - debt (a)
3.0% - 7.2% (5.5%)
3.0% - 6.9% (5.4%)
Terminal capitalization rate (b)
N/A
4.8% - 5.5% (5.2%)
Direct capitalization rate (b)
4.25% (4.25%)
4.25% (4.25%) (Implied)
Domestic servicing rights 19,612 Discounted cash flow Debt yield (a)
8.50% (8.50%)
8.50% (8.50%)
Discount rate (b)
15% (15%)
15% (15%)
VIE assets 41,633,853 Discounted cash flow Yield (b)
0% - 551.8% (25.2%)
0% - 691.0% (15.9%)
Duration (c)
0 - 9.7 years (2.0 years)
0 - 10.0 years (1.8 years)
VIE liabilities 5,358,517 Discounted cash flow Yield (b)
0% - 551.8% (15.6%)
0% - 691.0% (11.4%)
Duration (c)
0 - 9.7 years (1.7 years)
0 - 10.0 years (1.7 years)
______________________________________________________________________________________________________________________
(1)Unobservable inputs were weighted by the relative carrying value of the instruments as of March 31, 2024 and December 31, 2023.
Information about Uncertainty of Fair Value Measurements
(a)Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.
(b)Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.
(c)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question.
55
Table of Contents

(d)This unobservable input is not subject to variability as of the respective reporting dates.
(e)Any delay in the putback recovery date leads to a decrease in fair value for the majority of securities in our RMBS portfolio.
(f)3% and 5% of the portfolio falls within a range of 45% - 80% as of March 31, 2024 and December 31, 2023, respectively.
21. Income Taxes
Certain of our domestic subsidiaries have elected to be treated as taxable REIT subsidiaries ("TRSs"). TRSs permit us to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT.
Our TRSs engage in various real estate-related operations, including special servicing of commercial real estate, originating and securitizing mortgage loans, and investing in entities which engage in real estate-related operations. As of both March 31, 2024 and December 31, 2023, approximately $3.1 billion, of assets were owned by TRS entities. Our TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs.
The following table is a reconciliation of our U.S. federal income tax provision determined using our statutory federal tax rate to our reported income tax provision (benefit) for the three months ended March 31, 2024 and 2023 (dollars in thousands):
For the Three Months Ended March 31,
2024 2023
Federal statutory tax rate $ 33,824 21.0 % $ 10,703 21.0 %
REIT and other non-taxable income (32,915) (20.5) % (17,727) (34.8) %
State income taxes 298 0.2 % (2,308) (4.5) %
Federal benefit of state tax deduction (63) - % 485 1.0 %
Other 62 - % 52 - %
Effective tax rate $ 1,206 0.7 % $ (8,795) (17.3) %

For the three months ended March 31, 2024 and 2023, we have utilized the discrete effective tax rate method, as allowed by ASC 740-270-30-18, "Income Taxes-Interim Reporting," to calculate our interim income tax expense (benefit). The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. We believe that due to market dislocation and volatility, particularly with respect to the Company's residential assets that are housed in TRSs, the use of the discrete method is more appropriate at this time than the annual effective tax rate method due to the high degree of uncertainty in estimating annual pretax earnings.
22. Commitments and Contingencies

As of March 31, 2024, our Commercial and Residential Lending Segment had future commercial loan funding commitments totaling $1.4 billion, of which we expect to fund $1.1 billion. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. In connection with the prior sale of a $433.1 million first mortgage loan on an office and retail center in Los Angeles, for which we retained the mezzanine loan ($81.6 million amortized cost and $10.2 million unfunded commitment as of March 31, 2024), we entered into various guarantees, including a carry guaranty and a guaranty related to tenant improvement and leasing commission deficiencies. These guarantees provide for the payment of approximately $70.0 million by us to the senior lender in the event that the first mortgage loan is foreclosed. The loan is currently performing and the senior lender obtained an appraisal during the three months ended March 31, 2024 indicating full recovery in excess of the outstanding debt. As a result, we do not believe foreclosure is probable at this time and thus no liability has been recorded as of March 31, 2024.
56
Table of Contents

As of March 31, 2024, our Infrastructure Lending Segment had future infrastructure loan funding commitments totaling $183.2 million, including $117.1 million under revolvers and letters of credit ("LCs"), and $66.1 million under delayed draw term loans. As of March 31, 2024, $12.6 million of revolvers and LCs were outstanding.
Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios or executions of new leases before advances are made to the borrower.
Management is not aware of any other contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business that would have a material adverse effect on our consolidated financial statements.
57
Table of Contents

23. Segment Data
In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis.
The table below presents our results of operations for the three months ended March 31, 2024 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Subtotal Securitization
VIEs 		Total
Revenues:
Interest income from loans $ 394,472 $ 66,398 $ - $ 2,622 $ - $ 463,492 $ - $ 463,492
Interest income from investment securities 31,405 138 - 21,144 - 52,687 (34,481) 18,206
Servicing fees 128 - - 13,039 - 13,167 (3,478) 9,689
Rental income 3,565 - 20,775 4,507 - 28,847 - 28,847
Other revenues 983 392 127 748 604 2,854 - 2,854
Total revenues 430,553 66,928 20,902 42,060 604 561,047 (37,959) 523,088
Costs and expenses:
Management fees 192 - - - 45,822 46,014 - 46,014
Interest expense 236,149 38,973 13,298 8,317 59,429 356,166 (210) 355,956
General and administrative 16,828 5,955 1,263 23,467 3,150 50,663 - 50,663
Costs of rental operations 2,025 - 5,707 2,612 - 10,344 - 10,344
Depreciation and amortization 1,949 14 5,855 1,749 251 9,818 - 9,818
Credit loss provision, net 34,977 862 - - - 35,839 - 35,839
Other expense 730 - - (56) - 674 - 674
Total costs and expenses 292,850 45,804 26,123 36,089 108,652 509,518 (210) 509,308
Other income (loss):
Change in net assets related to consolidated VIEs - - - - - - 10,086 10,086
Change in fair value of servicing rights - - - (3,381) - (3,381) 3,609 228
Change in fair value of investment securities, net (6,991) - - (16,458) - (23,449) 24,364 915
Change in fair value of mortgage loans, net (40,677) - - 11,664 - (29,013) - (29,013)
Income from affordable housing fund investments - - 9,448 - - 9,448 - 9,448
Earnings from unconsolidated entities
7,345 327 - 313 - 7,985 (310) 7,675
(Loss) gain on sale of investments and other assets, net (41) - 92,003 - - 91,962 - 91,962
Gain (loss) on derivative financial instruments, net 110,952 122 1,721 3,012 (13,868) 101,939 - 101,939
Foreign currency (loss) gain, net
(41,818) (84) 32 - - (41,870) - (41,870)
Gain (loss) on extinguishment of debt
315 (560) (1,209) - - (1,454) - (1,454)
Other (loss) income, net (2,676) 40 - 6 - (2,630) - (2,630)
Total other income (loss) 26,409 (155) 101,995 (4,844) (13,868) 109,537 37,749 147,286
Income (loss) before income taxes 164,112 20,969 96,774 1,127 (121,916) 161,066 - 161,066
Income tax (provision) benefit
(721) 128 - (613) - (1,206) - (1,206)
Net income (loss) 163,391 21,097 96,774 514 (121,916) 159,860 - 159,860
Net (income) loss attributable to non-controlling interests
(3) - (6,225) 700 - (5,528) - (5,528)
Net income (loss) attributable to Starwood Property Trust, Inc.
$ 163,388 $ 21,097 $ 90,549 $ 1,214 $ (121,916) $ 154,332 $ - $ 154,332
58
Table of Contents

The table below presents our results of operations for the three months ended March 31, 2023 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Subtotal Securitization
VIEs 		Total
Revenues:
Interest income from loans $ 375,601 $ 54,760 $ - $ 547 $ - $ 430,908 $ - $ 430,908
Interest income from investment securities 32,521 1,338 - 22,785 - 56,644 (38,007) 18,637
Servicing fees 159 - - 9,834 - 9,993 (2,737) 7,256
Rental income 1,981 - 23,695 6,613 - 32,289 - 32,289
Other revenues 344 216 103 383 278 1,324 - 1,324
Total revenues 410,606 56,314 23,798 40,162 278 531,158 (40,744) 490,414
Costs and expenses:
Management fees 218 - - - 39,322 39,540 - 39,540
Interest expense 226,393 32,818 12,599 7,429 56,272 335,511 (210) 335,301
General and administrative 11,893 3,964 952 20,047 5,252 42,108 - 42,108
Costs of rental operations 2,451 - 5,549 3,666 - 11,666 - 11,666
Depreciation and amortization 1,631 30 8,108 2,647 - 12,416 - 12,416
Credit loss provision, net 30,790 12,404 - - - 43,194 - 43,194
Other expense 1,039 8 - 70 - 1,117 - 1,117
Total costs and expenses 274,415 49,224 27,208 33,859 100,846 485,552 (210) 485,342
Other income (loss):
Change in net assets related to consolidated VIEs - - - - - - 41,138 41,138
Change in fair value of servicing rights - - - (50) - (50) 354 304
Change in fair value of investment securities, net 14,866 - - (14,459) - 407 (325) 82
Change in fair value of mortgage loans, net 8,262 - - 639 - 8,901 - 8,901
Income from affordable housing fund investments - - 12,965 - - 12,965 - 12,965
Earnings (loss) from unconsolidated entities 939 1,740 - 679 - 3,358 (633) 2,725
Gain on sale of investments and other assets, net - - - 190 - 190 - 190
(Loss) gain on derivative financial instruments, net (34,363) (51) (1,217) (3,467) 6,270 (32,828) - (32,828)
Foreign currency gain, net 14,930 75 14 - - 15,019 - 15,019
Loss on extinguishment of debt (61) - - - - (61) - (61)
Other loss, net (2,541) - - - - (2,541) - (2,541)
Total other income (loss) 2,032 1,764 11,762 (16,468) 6,270 5,360 40,534 45,894
Income (loss) before income taxes 138,223 8,854 8,352 (10,165) (94,298) 50,966 - 50,966
Income tax benefit 6,557 46 - 2,192 - 8,795 - 8,795
Net income (loss) 144,780 8,900 8,352 (7,973) (94,298) 59,761 - 59,761
Net income attributable to non-controlling interests (3) - (6,978) (806) - (7,787) - (7,787)
Net income (loss) attributable to Starwood Property Trust, Inc.
$ 144,777 $ 8,900 $ 1,374 $ (8,779) $ (94,298) $ 51,974 $ - $ 51,974


59
Table of Contents

The table below presents our consolidated balance sheet as of March 31, 2024 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Subtotal Securitization
VIEs 		Total
Assets:
Cash and cash equivalents $ 9,602 $ 137,049 $ 29,103 $ 8,340 $ 143,269 $ 327,363 $ - $ 327,363
Restricted cash 11,506 41,394 1,031 6,862 64,548 125,341 - 125,341
Loans held-for-investment, net 14,221,471 2,376,191 - 9,200 - 16,606,862 - 16,606,862
Loans held-for-sale 2,518,600 47,149 - 123,619 - 2,689,368 - 2,689,368
Investment securities 1,113,081 18,422 - 1,124,724 - 2,256,227 (1,540,154) 716,073
Properties, net 434,365 - 551,502 58,698 - 1,044,565 - 1,044,565
Investments of consolidated affordable housing fund - - 2,008,937 - - 2,008,937 - 2,008,937
Investments in unconsolidated entities 25,371 53,018 - 33,154 - 111,543 (14,616) 96,927
Goodwill - 119,409 - 140,437 - 259,846 - 259,846
Intangible assets 12,724 - 24,505 60,293 - 97,522 (34,255) 63,267
Derivative assets 73,830 216 4,280 4,590 - 82,916 - 82,916
Accrued interest receivable 179,147 11,750 1,484 1,939 178 194,498 - 194,498
Other assets 186,807 5,745 61,505 17,296 48,500 319,853 - 319,853
VIE assets, at fair value - - - - - - 41,633,853 41,633,853
Total Assets $ 18,786,504 $ 2,810,343 $ 2,682,347 $ 1,589,152 $ 256,495 $ 26,124,841 $ 40,044,828 $ 66,169,669
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 127,023 $ 24,337 $ 10,730 $ 28,936 $ 68,972 $ 259,998 $ - $ 259,998
Related-party payable - - - - 44,226 44,226 - 44,226
Dividends payable - - - - 153,174 153,174 - 153,174
Derivative liabilities 22,074 - - 261 52,312 74,647 - 74,647
Secured financing agreements, net 9,051,746 1,069,519 598,850 521,399 1,335,623 12,577,137 (20,650) 12,556,487
Collateralized loan obligations and single asset securitization, net 2,406,928 816,939 - - - 3,223,867 - 3,223,867
Unsecured senior notes, net - - - - 2,751,666 2,751,666 - 2,751,666
VIE liabilities, at fair value - - - - - - 40,065,423 40,065,423
Total Liabilities 11,607,771 1,910,795 609,580 550,596 4,405,973 19,084,715 40,044,773 59,129,488
Temporary Equity:Redeemable non-controlling interests
- - 415,485 - - 415,485 - 415,485
Permanent Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock - - - - 3,234 3,234 - 3,234
Additional paid-in capital 1,486,260 705,773 (615,052) (663,588) 4,972,459 5,885,852 - 5,885,852
Treasury stock - - - - (138,022) (138,022) - (138,022)
Retained earnings (accumulated deficit) 5,678,294 193,775 2,065,089 1,557,613 (8,987,149) 507,622 - 507,622
Accumulated other comprehensive income 14,061 - - - - 14,061 - 14,061
Total Starwood Property Trust, Inc. Stockholders' Equity 7,178,615 899,548 1,450,037 894,025 (4,149,478) 6,272,747 - 6,272,747
Non-controlling interests in consolidated subsidiaries 118 - 207,245 144,531 - 351,894 55 351,949
Total Permanent Equity 7,178,733 899,548 1,657,282 1,038,556 (4,149,478) 6,624,641 55 6,624,696
Total Liabilities and Equity $ 18,786,504 $ 2,810,343 $ 2,682,347 $ 1,589,152 $ 256,495 $ 26,124,841 $ 40,044,828 $ 66,169,669
60
Table of Contents

The table below presents our consolidated balance sheet as of December 31, 2023 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment 		Infrastructure
Lending
Segment 		Property
Segment 		Investing
and Servicing
Segment 		Corporate Subtotal Securitization
VIEs 		Total
Assets:
Cash and cash equivalents $ 8,823 $ 56,300 $ 19,957 $ 22,011 $ 87,569 $ 194,660 $ - $ 194,660
Restricted cash 23,902 28,693 1,016 5,175 58,526 117,312 - 117,312
Loans held-for-investment, net 15,069,389 2,495,660 - 9,200 - 17,574,249 - 17,574,249
Loans held-for-sale 2,604,594 - - 41,043 - 2,645,637 - 2,645,637
Investment securities 1,147,829 19,042 - 1,147,550 - 2,314,421 (1,578,859) 735,562
Properties, net 431,155 - 555,455 59,774 - 1,046,384 - 1,046,384
Properties held-for-sale, net - - 290,937 - - 290,937 - 290,937
Investments of consolidated affordable housing fund - - 2,012,833 - - 2,012,833 - 2,012,833
Investments in unconsolidated entities 19,151 52,691 - 33,134 - 104,976 (14,600) 90,376
Goodwill - 119,409 - 140,437 - 259,846 - 259,846
Intangible assets 13,415 - 25,432 63,985 - 102,832 (37,865) 64,967
Derivative assets 55,559 84 5,638 2,156 - 63,437 - 63,437
Accrued interest receivable 180,441 12,485 1,502 1,369 5,070 200,867 - 200,867
Other assets 301,436 3,486 50,459 15,828 49,564 420,773 - 420,773
VIE assets, at fair value - - - - - - 43,786,356 43,786,356
Total Assets $ 19,855,694 $ 2,787,850 $ 2,963,229 $ 1,541,662 $ 200,729 $ 27,349,164 $ 42,155,032 $ 69,504,196
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 106,236 $ 45,232 $ 12,225 $ 44,452 $ 85,297 $ 293,442 $ - $ 293,442
Related-party payable - - - - 44,816 44,816 - 44,816
Dividends payable - - - - 152,888 152,888 - 152,888
Derivative liabilities 54,066 - - - 48,401 102,467 - 102,467
Secured financing agreements, net 10,368,668 1,088,965 598,350 495,857 1,336,913 13,888,753 (20,757) 13,867,996
Collateralized loan obligations and single asset securitization, net 2,674,938 816,354 - - - 3,491,292 - 3,491,292
Unsecured senior notes, net - - - - 2,158,888 2,158,888 - 2,158,888
Debt related to properties held-for-sale
- - 193,691 - - 193,691 - 193,691
VIE liabilities, at fair value - - - - - - 42,175,734 42,175,734
Total Liabilities 13,203,908 1,950,551 804,266 540,309 3,827,203 20,326,237 42,154,977 62,481,214
Temporary Equity: Redeemable non-controlling interests
- - 414,348 - - 414,348 - 414,348
Permanent Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock - - - - 3,208 3,208 - 3,208
Additional paid-in capital 1,121,413 664,621 (437,169) (705,176) 5,220,981 5,864,670 - 5,864,670
Treasury stock - - - - (138,022) (138,022) - (138,022)
Retained earnings (accumulated deficit) 5,514,906 172,678 1,974,539 1,556,399 (8,712,641) 505,881 - 505,881
Accumulated other comprehensive income 15,352 - - - - 15,352 - 15,352
Total Starwood Property Trust, Inc. Stockholders' Equity 6,651,671 837,299 1,537,370 851,223 (3,626,474) 6,251,089 - 6,251,089
Non-controlling interests in consolidated subsidiaries 115 - 207,245 150,130 - 357,490 55 357,545
Total Permanent Equity 6,651,786 837,299 1,744,615 1,001,353 (3,626,474) 6,608,579 55 6,608,634
Total Liabilities and Equity $ 19,855,694 $ 2,787,850 $ 2,963,229 $ 1,541,662 $ 200,729 $ 27,349,164 $ 42,155,032 $ 69,504,196

61
Table of Contents

24. Subsequent Events
Our significant events subsequent to March 31, 2024 were as follows:
Collateralized Loan Obligations
In May 2024, we refinanced a $400 million pool of our infrastructure loans held-for-investment through a CLO, STWD 2024-FL3, with $330 million of third party financing at a weighted average coupon of SOFR + 2.18%. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years.
Refinancing of Medical Office Portfolio
In May 2024, we priced the refinancing of $600.0 million of outstanding debt on our Medical Office Portfolio due November, 2024 with $450.5 million of senior securitized mortgage debt and a $39.5 million mezzanine loan. The refinance proceeds will carry an initial term of two years, followed by three successive one-year extension options and a weighted average coupon of SOFR + 2.52%.


62
Table of Contents

Item 2. 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, 2023 (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 March 31, 2024 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 commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that 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").
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

During 2023, inflation began to moderate as a result of the monetary policy tightening actions taken by the Federal Reserve, including repeatedly raising interest rates. While it is possible that the Federal Reserve may begin to lower interest rates later in 2024, interest rates may remain at or near recent highs or may increase, which creates further uncertainty for the economy and for our borrowers. Although our business model is such that rising interest rates will, all else equal, correlate to increases in our net income, elevated interest rates over time may adversely affect our existing borrowers and lead to nonperformance as higher costs may dampen consumer spending and slow income growth, which may negatively impact the collateral underlying certain of our loans. Additionally, higher interest rates could adversely affect the value of commercial real estate we own and that collateralizes our loans. It remains difficult to predict the full impact of recent events and any future changes in interest rates or inflation.

63
Table of Contents

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. 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.
Developments During the First Quarter of 2024
Commercial and Residential Lending Segment
•Funded $128.1 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $909.4 million ($457.4 million, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
Infrastructure Lending Segment
•Acquired $120.2 million of infrastructure loans and funded $42.5 million of pre-existing infrastructure loan commitments.
•Received proceeds of $209.8 million from principal repayments on our infrastructure loans and bonds.
Property
•Sold the 16 retail properties which comprised our Property Segment's Master Lease Portfolio for net proceeds of $188.0 million, recognizing a net gain of $90.8 million.
Investing and Servicing
•Originated commercial conduit loans of $293.3 million.
•Received proceeds of $218.6 million from sales of previously originated commercial conduit loans.
•Obtained one new special servicing assignment for a CMBS trust with a total unpaid principal balance of $1.1 billion, while $3.7 billion matured, bringing our total named special servicing portfolio to $96.1 billion.

Corporate
•Issued $600.0 million of 7.25% Senior Notes due 2029 (the "2029 Senior Notes") and swapped the notes to a floating rate of SOFR + 3.25%.
Subsequent Events
Refer to Note 24 to the Condensed Consolidated Financial Statements for disclosure regarding significant transactions that occurred subsequent to March 31, 2024.
64
Table of Contents

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 March 31, 2024, December 31, 2023, and March 31, 2023 by business segment (amounts in thousands):
$ Change $ Change
For the Three Months Ended
March 31, 2024 vs.
March 31, 2024 vs.
Revenues: March 31, 2024 December 31, 2023
March 31, 2023
December 31, 2023
March 31, 2023
Commercial and Residential Lending Segment $ 430,553 $ 426,132 $ 410,606 $ 4,421 $ 19,947
Infrastructure Lending Segment 66,928 64,363 56,314 2,565 10,614
Property Segment 20,902 23,091 23,798 (2,189) (2,896)
Investing and Servicing Segment 42,060 48,490 40,162 (6,430) 1,898
Corporate 604 450 278 154 326
Securitization VIE eliminations (37,959) (40,248) (40,744) 2,289 2,785
523,088 522,278 490,414 810 32,674
Costs and expenses:
Commercial and Residential Lending Segment 292,850 289,347 274,415 3,503 18,435
Infrastructure Lending Segment 45,804 42,590 49,224 3,214 (3,420)
Property Segment 26,123 29,148 27,208 (3,025) (1,085)
Investing and Servicing Segment 36,089 40,392 33,859 (4,303) 2,230
Corporate 108,652 108,660 100,846 (8) 7,806
Securitization VIE eliminations (210) (213) (210) 3 -
509,308 509,924 485,342 (616) 23,966
Other income (loss):
Commercial and Residential Lending Segment 26,409 (23,363) 2,032 49,772 24,377
Infrastructure Lending Segment (155) 4,683 1,764 (4,838) (1,919)
Property Segment 101,995 35,150 11,762 66,845 90,233
Investing and Servicing Segment (4,844) 21,965 (16,468) (26,809) 11,624
Corporate (13,868) 12,131 6,270 (25,999) (20,138)
Securitization VIE eliminations 37,749 40,035 40,534 (2,286) (2,785)
147,286 90,601 45,894 56,685 101,392
Income (loss) before income taxes:
Commercial and Residential Lending Segment 164,112 113,422 138,223 50,690 25,889
Infrastructure Lending Segment 20,969 26,456 8,854 (5,487) 12,115
Property Segment 96,774 29,093 8,352 67,681 88,422
Investing and Servicing Segment 1,127 30,063 (10,165) (28,936) 11,292
Corporate (121,916) (96,079) (94,298) (25,837) (27,618)
Securitization VIE eliminations - - - - -
161,066 102,955 50,966 58,111 110,100
Income tax (provision) benefit
(1,206) (18,315) 8,795 17,109 (10,001)
Net income attributable to non-controlling interests (5,528) (13,679) (7,787) 8,151 2,259
Net income attributable to Starwood Property Trust, Inc. $ 154,332 $ 70,961 $ 51,974 $ 83,371 $ 102,358
65
Table of Contents

Three Months Ended March 31, 2024 Compared to the Three Months Ended December 31, 2023
Commercial and Residential Lending Segment

Revenues

For the three months March 31, 2024, revenues of our Commercial and Residential Lending Segment increased $4.5 million to $430.6 million, compared to $426.1 million for the three months ended December 31, 2023. This increase was primarily due to an increase in interest income from loans of $3.6 million. The increase in interest income from loans reflects (i) a $4.4 million increase from commercial loans reflecting higher prepayment related income, partially offset by the effects of lower average balances and interest rate spreads, and (ii) a $0.8 million decrease from residential loans reflecting lower average balances.

Costs and Expenses

For the three months ended March 31, 2024, costs and expenses of our Commercial and Residential Lending Segment increased $3.5 million to $292.8 million, compared to $289.3 million for the three months ended December 31, 2023. This increase was primarily due to increases of $9.7 million in the credit loss provision and $3.2 million in general and administrative expenses, partially offset by a $10.4 million decrease in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio. The increase in the credit loss provision was primarily due to us selecting the most unfavorable modeled macroeconomic forecast for office and retail loans in the first quarter of 2024. The decrease in interest expense was primarily due to lower average borrowings outstanding due to paydowns from excess cash balances.

Net Interest Income (amounts in thousands)
For the Three Months Ended
March 31, 2024 December 31, 2023 Change
Interest income from loans $ 394,472 $ 390,873 $ 3,599
Interest income from investment securities 31,405 32,668 (1,263)
Interest expense (236,149) (246,576) 10,427
Net interest income $ 189,728 $ 176,965 $ 12,763

For the three months ended March 31, 2024, net interest income of our Commercial and Residential Lending Segment increased $12.7 million to $189.7 million, compared to $177.0 million for the three months ended December 31, 2023. This increase reflects a net increase in interest income and the decrease in interest expense on our secured financing facilities, both as discussed in the sections above.

During the three months ended March 31, 2024 and December 31, 2023, 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
March 31, 2024 December 31, 2023
Commercial 9.6 % 9.7 %
Residential 5.1 % 5.3 %
Overall 8.9 % 9.0 %

For the three months ended March 31, 2024, the weighted average unlevered yield on our commercial loans decreased slightly primarily due to lower average interest rate spreads. The weighted average unlevered yield on our residential loans decreased primarily due to prepayments of higher rate loans.

During both the three months ended March 31, 2024 and December 31, 2023, the Commercial and Residential Lending Segment's weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 7.6%. Interest rate hedges had the effect of reducing these weighted average borrowing costs to 6.7% and 6.8% during the three months ended March 31, 2024 and December 31, 2023, respectively.

66
Table of Contents

Other Income (Loss)

For the three months ended March 31, 2024, other income of our Commercial and Residential Lending Segment increased $49.8 million to income of $26.4 million compared to a loss of $23.4 million for the three months ended December 31, 2023. This increase was primarily due to (i) a $268.8 million favorable change in gain (loss) on derivatives and (ii) the nonrecurrence of $101.1 million of property impairment losses recognized in the fourth quarter of 2023, both partially offset by (iii) a $191.9 million unfavorable change in fair value of residential loans and (iv) a $120.6 million unfavorable change in foreign currency gain (loss). The favorable change in gain (loss) on derivatives in the first quarter of 2024 reflects a $137.2 million favorable change on interest rate swaps principally related to residential loans, which partially offsets the unfavorable change in fair value of those loans, and a $131.6 million favorable change in gain (loss) on foreign currency hedges. 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"), Euro ("EUR") and Australian dollar ("AUD"), in the first quarter of 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a strengthening against the AUD, in the fourth quarter of 2023.

Infrastructure Lending Segment

Revenues

For the three months ended March 31, 2024, revenues of our Infrastructure Lending Segment increased $2.5 million to $66.9 million, compared to $64.4 million for the three months ended December 31, 2023. This was primarily due to an increase in interest income from loans of $2.5 million reflecting higher average loan balances and prepayment related income.

Costs and Expenses

For the three months ended March 31, 2024, costs and expenses of our Infrastructure Lending Segment increased $3.2 million to $45.8 million, compared to $42.6 million for the three months ended December 31, 2023. The increase was primarily due to increases of $1.9 million in general and administrative expenses and $1.1 million in interest expense associated with the various secured financing facilities used to fund this segment's investment portfolio. The increase in interest expense was primarily due to higher average borrowings outstanding.

Net Interest Income (amounts in thousands)
For the Three Months Ended
March 31, 2024 December 31, 2023 Change
Interest income from loans $ 66,398 $ 63,915 $ 2,483
Interest income from investment securities 138 147 (9)
Interest expense (38,973) (37,828) (1,145)
Net interest income $ 27,563 $ 26,234 $ 1,329

For the three months ended March 31, 2024, net interest income of our Infrastructure Lending Segment increased $1.4 million to $27.6 million, compared to $26.2 million for the three months ended December 31, 2023. The increase reflects the increase in interest income, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.

During both the three months ended March 31, 2024 and December 31, 2023, 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 10.4%.

During both the three months ended March 31, 2024 and December 31, 2023, the Infrastructure Lending Segment's weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 8.0%.

Other (Loss) Income

For the three months ended March 31, 2024, other income of our Infrastructure Lending Segment decreased $4.9 million to a loss of $0.2 million, compared to income of $4.7 million for the three months ended December 31, 2023. The decrease is primarily due to a $4.1 million decrease in earnings from unconsolidated entities.
67
Table of Contents

Property Segment

Change in Results by Portfolio (amounts in thousands)
$ Change from prior period
Revenues Costs and
expenses 		Gain (loss) on derivative
financial instruments 		Other income (loss) Income (loss) before
income taxes
Master Lease Portfolio $ (2,532) $ (2,996) $ - $ 90,795 $ 91,259
Medical Office Portfolio 445 (201) 4,057 - 4,703
Woodstar Fund (96) (70) - (28,100) (28,126)
Other/Corporate (6) 242 - 93 (155)
Total $ (2,189) $ (3,025) $ 4,057 $ 62,788 $ 67,681
See Notes 6 and 7 to the Condensed Consolidated Financial Statements for a description of the above-referenced Property Segment portfolios and fund.

Revenues

For the three months ended March 31, 2024, revenues of our Property Segment decreased $2.2 million to $20.9 million for the three months ended March 31, 2024, compared to $23.1 million for the three months ended December 31, 2023. The decrease is primarily due to the sale of the Master Lease Portfolio on February 29, 2024 (see Note 3 to the Condensed Consolidated Financial Statements).

Costs and Expenses

For the three months ended March 31, 2024, costs and expenses of our Property Segment decreased $3.0 million to $26.1 million, compared to $29.1 million for the three months ended December 31, 2023, primarily due to the sale of the Master Lease Portfolio on February 29, 2024.

Other Income

For the three months ended March 31, 2024, other income of our Property Segment increased $66.8 million to $102.0 million compared to $35.2 million for the three months ended December 31, 2023. The increase is primarily due to (i) a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024 and (ii) a $4.1 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio, partially offset by (iii) a $28.1 million decrease in income attributable to investments of the Woodstar Fund, mainly reflecting lower unrealized increases in fair value during the first quarter of 2024.

Investing and Servicing Segment

Revenues

For the three months ended March 31, 2024, revenues of our Investing and Servicing Segment decreased $6.4 million to $42.1 million, compared to $48.5 million for the three months ended December 31, 2023. The decrease in revenues is primarily due to a $4.1 million decrease in interest income from conduit loans and CMBS investments and a $1.4 million decrease in servicing fees.

Costs and Expenses

For the three months ended March 31, 2024, costs and expenses of our Investing and Servicing Segment decreased $4.3 million to $36.1 million, compared to $40.4 million for the three months ended December 31, 2023. The decrease was primarily due to decreases of $2.1 million in general and administrative expenses and $1.5 million in interest expense, both primarily related to loan securitization activity.

Other (Loss) Income

For the three months ended March 31, 2024, other income of our Investing and Servicing Segment decreased $26.8 million to a loss of $4.8 million, compared to income of $22.0 million for the three months ended December 31, 2023. The decrease in other income was primarily due to (i) an $11.0 million lesser increase in fair value of conduit loans, (ii) a $10.8
68
Table of Contents

million greater decrease in fair value of CMBS investments, (iii) the nonrecurrence of a $10.2 million gain on sale of our interest in an operating property in the fourth quarter of 2023 and (iv) a $6.5 million unfavorable change in fair value of servicing rights, all partially offset by (v) an $11.8 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.

Corporate and Other Items

Corporate Costs and Expenses

For the three months ended March 31, 2024 and December 31, 2023, corporate expenses were relatively unchanged at $108.7 million.

Corporate Other (Loss) Income

For the three months ended March 31, 2024, corporate other income decreased $26.0 million to a loss of $13.9 million, compared to income of $12.1 million for the three months ended December 31, 2023. This was due to 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 March 31, 2024, our income tax provision decreased $17.1 million to $1.2 million compared to $18.3 million for the three months ended December 31, 2023 due to lower taxable income of our TRSs in the first quarter of 2024 compared to the fourth quarter of 2023.

Net Income Attributable to Non-controlling Interests

During the three months ended March 31, 2024, net income attributable to non-controlling interests decreased $8.2 million to $5.5 million, compared to $13.7 million during the three months ended December 31, 2023. The decrease was primarily due to non-controlling interests in decreased income of the Woodstar Fund and a consolidated CMBS joint venture in the first quarter of 2024.

69
Table of Contents

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023
Commercial and Residential Lending Segment
Revenues
For the three months ended March 31, 2024, revenues of our Commercial and Residential Lending Segment increased $20.0 million to $430.6 million, compared to $410.6 million for the three months ended March 31, 2023. This increase was primarily due to an increase in interest income from loans of $18.9 million. The increase in interest income from loans reflects (i) a $21.3 million increase from commercial loans, reflecting higher average index rates and prepayment related income, partially offset by lower average loan balances, and (ii) a $2.4 million decrease from residential loans principally due to lower average balances.
Costs and Expenses
For the three months ended March 31, 2024, costs and expenses of our Commercial and Residential Lending Segment increased $18.4 million to $292.8 million, compared to $274.4 million for the three months ended March 31, 2023. This increase was primarily due to increases of (i) $9.8 million in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio, (ii) $4.9 million in general and administrative expenses, primarily for compensation and professional fees, and (iii) $4.2 million in credit loss provision. The increase in interest expense was primarily due to higher average index rates. The increase in credit loss provision was primarily due to us selecting the most unfavorable modeled macroeconomic forecast for office and retail loans in the first quarter of 2024.

Net Interest Income (amounts in thousands)
For the Three Months Ended March 31,
2024 2023 Change
Interest income from loans $ 394,472 $ 375,601 $ 18,871
Interest income from investment securities 31,405 32,521 (1,116)
Interest expense (236,149) (226,393) (9,756)
Net interest income $ 189,728 $ 181,729 $ 7,999
For the three months ended March 31, 2024, net interest income of our Commercial and Residential Lending Segment increased $8.0 million to $189.7 million, compared to $181.7 million for the three months ended March 31, 2023. This increase reflects a net increase in interest income, partially offset by the increase in interest expense on our secured financing facilities, both as discussed in the sections above.
During the three months ended March 31, 2024 and 2023, 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 March 31,
2024 2023
Commercial 9.6 % 8.6 %
Residential 5.1 % 4.9 %
Overall 8.9 % 8.1 %
The weighted average unlevered yield on our commercial loans increased primarily due to higher average index rates and prepayment related income. The unlevered yield on our residential loans increased primarily due to a decline in fair value of the residential loans.
During the three months ended March 31, 2024 and 2023, the Commercial and Residential Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 7.6% and 6.7%, respectively. The increase in borrowing rates primarily reflects higher average index rates. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 6.7% and 6.2% during the three months ended March 31, 2024 and 2023, respectively.
70
Table of Contents

Other Income
For the three months ended March 31, 2024, other income of our Commercial and Residential Lending Segment increased $24.4 million to $26.4 million, compared to $2.0 million for the three months ended March 31, 2023. This increase primarily reflects (i) a $145.3 million favorable change in gain (loss) on derivatives and (ii) a $6.4 million increase in earnings from unconsolidated entities primarily due to an observable price change in an equity investment, partially offset by (iii) a $56.7 million unfavorable change in foreign currency gain (loss), (iv) a $48.9 million unfavorable change in fair value of residential loans and (v) a $21.9 million unfavorable change in fair value of primarily RMBS investment securities. The favorable change in gain (loss) on derivatives during the three months ended March 31, 2024 reflects (i) an $86.8 million favorable change in gain (loss) on interest rate swaps principally related to residential loans, which more than offsets the decrease in fair value of those loans, and (ii) a $58.5 million favorable change in gain (loss) on foreign currency hedges. 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 GBP, EUR and AUD during the first quarter of 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a strengthening against the AUD, in the first quarter of 2023.
Infrastructure Lending Segment
Revenues
For the three months ended March 31, 2024, revenues of our Infrastructure Lending Segment increased $10.6 million to $66.9 million, compared to $56.3 million for the three months ended March 31, 2023. This increase was primarily due to an increase in interest income from loans of $11.6 million, principally due to higher average loan balances and index rates, partially offset by a $1.2 million decrease in interest income from investment securities, primarily due to lower average balances resulting from repayments.
Costs and Expenses
For the three months ended March 31, 2024, costs and expenses of our Infrastructure Lending Segment decreased $3.4 million to $45.8 million, compared to $49.2 million for the three months ended March 31, 2023. The decrease was primarily due to (i) an $11.5 million decrease in credit loss provision, partially offset by (ii) a $6.2 million increase in interest expense associated with the various secured financing facilities used to fund this segment's investment portfolio and (iii) a $2.0 million increase in general and administrative expenses, primarily for compensation and professional fees. The decrease in the credit loss provision was primarily due to specific allowances for a credit-deteriorated loan and investment security provided during the first quarter of 2023. The increase in interest expense was primarily due to higher average index rates and borrowings outstanding.
Net Interest Income (amounts in thousands)
For the Three Months Ended March 31,
2024 2023 Change
Interest income from loans $ 66,398 $ 54,760 $ 11,638
Interest income from investment securities 138 1,338 (1,200)
Interest expense (38,973) (32,818) (6,155)
Net interest income $ 27,563 $ 23,280 $ 4,283
For the three months ended March 31, 2024, net interest income of our Infrastructure Lending Segment increased $4.3 million to $27.6 million, compared to $23.3 million for the three months ended March 31, 2023. The increase reflects the net increase in interest income, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.
During the three months ended March 31, 2024 and 2023, 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 10.4% and 9.4%, respectively, primarily reflecting higher average index rates in the first quarter of 2024.
71
Table of Contents

During the three months ended March 31, 2024 and 2023, the Infrastructure Lending Segment's weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 8.0% and 7.1%, respectively.
Other (Loss) Income
For the three months ended March 31, 2024 and 2023, other income of our Infrastructure Lending Segment decreased $2.0 million to a loss of $0.2 million, compared to income of $1.8 million for the three months ended March 31, 2023. The decrease primarily reflects a $1.4 million decrease in earnings from unconsolidated entities and a $0.6 million loss on extinguishment of debt in the first quarter of 2024.
Property Segment
Change in Results by Portfolio (amounts in thousands)
$ Change from prior period
Revenues Costs and
expenses 		Gain (loss) on derivative
financial instruments 		Other income (loss) Income (loss) before
income taxes
Master Lease Portfolio $ (2,532) $ (2,940) $ - $ 90,795 $ 91,203
Medical Office Portfolio (382) 1,488 2,938 - 1,068
Woodstar Fund 9 21 - (3,517) (3,529)
Other/Corporate 9 346 - 17 (320)
Total $ (2,896) $ (1,085) $ 2,938 $ 87,295 $ 88,422
Revenues
For the three months ended March 31, 2024, revenues of our Property Segment decreased $2.9 million to $20.9 million, compared to $23.8 million for the three months ended March 31, 2023, primarily due to the sale of our Master Lease Portfolio on February 29, 2024.
Costs and Expenses
For the three months ended March 31, 2024, costs and expenses of our Property Segment decreased $1.1 million to $26.1 million, compared to $27.2 million for the three months ended March 31, 2023. The decrease is primarily due to the sale of our Master Lease Portfolio on February 29, 2024, partially offset by an increase of $1.5 million in interest expense reflecting higher index rates on variable rate borrowings of the Medical Office Portfolio.
Other Income
For the three months ended March 31, 2024, other income of our Property Segment increased $90.2 million to $102.0 million, compared to $11.8 million for the three months ended March 31, 2023. The increase is primarily due to (i) a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024 and (ii) a $2.9 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio, partially offset by a $3.5 million decrease in income attributable to investments of the Woodstar Fund.
Investing and Servicing Segment
Revenues
For the three months ended March 31, 2024, revenues of our Investing and Servicing Segment increased $1.9 million to $42.1 million, compared to $40.2 million for the three months ended March 31, 2023. The increase in revenues was primarily due to a $3.2 million increase in servicing fees principally related to loan modifications, partially offset by a $2.1 million decrease in rental revenues due to fewer operating properties held.
Costs and Expenses
For the three months ended March 31, 2024, costs and expenses of our Investing and Servicing Segment increased $2.2 million to $36.1 million, compared to $33.9 million for the three months ended March 31, 2023. The increase in costs and expenses primarily reflects a $3.4 million increase in general and administrative expense, principally reflecting increased
72
Table of Contents

incentive compensation due to higher loan securitization volume, partially offset by a $1.1 million decrease in cost of rental operations due to fewer operating properties held.
Other Loss
For the three months ended March 31, 2024, other loss of our Investing and Servicing Segment decreased $11.7 million to of $4.8 million, compared to $16.5 million for the three months ended March 31, 2023. The decrease in other loss was primarily due to (i) an $11.0 million greater increase in fair value of conduit loans and (ii) a $6.5 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments, partially offset by (iii) a $3.3 million greater decrease in fair value of servicing rights and (iv) a $2.0 million greater decrease in fair value of CMBS investments.
Corporate and Other Items
Corporate Costs and Expenses
For the three months ended March 31, 2024, corporate expenses increased $7.9 million to $108.7 million, compared to $100.8 million for the three months ended March 31, 2023. This increase was primarily due to (i) a $6.5 million increase in management fees, primarily reflecting higher incentive fees, and (ii) a $3.2 million increase in interest expense reflecting higher average unsecured borrowings outstanding, as well as higher index rates on our secured term loans, partially offset by (iii) a $2.1 million decrease in general and administrative expenses.
Corporate Other (Loss) Income
For the three months ended March 31, 2024, corporate other income decreased $20.2 million to a loss of $13.9 million, compared to income of $6.3 million for the three months ended March 31, 2023. This was due to an unfavorable change in gain (loss) on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
Securitization VIE Eliminations

Refer to the preceding comparison of the three months ended March 31, 2024 to the three months ended December 31, 2023 for a discussion of the effect of securitization VIE eliminations.
Income Tax (Provision) Benefit
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 three months ended March 31, 2024, our income taxes increased $10.0 million to a provision of $1.2 million, compared to a benefit of $8.8 million for the three months ended March 31, 2023 due to taxable income of our TRSs in the first quarter of 2024 compared to tax losses in the first quarter of 2023 primarily attributable to net unrealized losses on our residential loans and related interest rate derivatives.
Net Income Attributable to Non-controlling Interests
For the three months ended March 31, 2024, net income attributable to non-controlling interests decreased $2.3 million to $5.5 million, compared to $7.8 million for the three months ended March 31, 2023. The decrease was primarily due to non-controlling interests in lower income of a consolidated CMBS joint venture and the Woodstar Fund in the first quarter of 2024.
73
Table of Contents

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 flow 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.
74
Table of Contents

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
March 31, 2024 December 31, 2023
March 31, 2023
Diluted weighted average shares - GAAP EPS 330,840 311,449 308,996
Add: Unvested stock awards 3,333 3,228 4,193
Add: Woodstar II Class A Units 9,707 9,721 9,773
Less: Convertible Notes dilution (18,344) - -
Diluted weighted average shares - Distributable EPS 325,536 324,398 322,962
As noted above, the definition of Distributable Earnings allows management to make adjustments, subject to the approval of a majority of our independent directors. This is done in situations where such adjustments are considered appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. No adjustments to the definition of Distributable Earnings became effective during the three months ended March 31, 2024.





75
Table of Contents

The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended March 31, 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 $ 430,553 $ 66,928 $ 20,902 $ 42,060 $ 604 $ 561,047
Costs and expenses (292,850) (45,804) (26,123) (36,089) (108,652) (509,518)
Other income (loss) 26,409 (155) 101,995 (4,844) (13,868) 109,537
Income (loss) before income taxes 164,112 20,969 96,774 1,127 (121,916) 161,066
Income tax (provision) benefit
(721) 128 - (613) - (1,206)
(Income) loss attributable to non-controlling interests
(3) - (6,225) 700 - (5,528)
Net income (loss) attributable to Starwood Property Trust, Inc. 163,388 21,097 90,549 1,214 (121,916) 154,332
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,659 - - 4,659
Non-controlling interests attributable to unrealized gains/losses - - (1,678) (2,053) - (3,731)
Non-cash equity compensation expense 2,200 456 86 1,597 5,707 10,046
Management incentive fee - - - - 19,083 19,083
Depreciation and amortization 2,099 5 5,939 1,843 - 9,886
Interest income adjustment for securities 5,581 - - 10,005 - 15,586
Consolidated income tax provision (benefit) associated with fair value adjustments
721 (128) - 613 - 1,206
Other non-cash items 3 - 274 38 9 324
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans 40,677 - - (11,664) - 29,013
Credit loss provision, net 34,977 862 - - - 35,839
Securities 6,991 - - 16,458 - 23,449
Woodstar Fund investments - - (9,448) - - (9,448)
Derivatives (110,952) (122) (1,721) (3,012) 13,868 (101,939)
Foreign currency 41,818 84 (32) - - 41,870
Earnings from unconsolidated entities
(7,345) (327) - (313) - (7,985)
Sales of properties - - (92,003) - - (92,003)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(2,395) - - 11,642 - 9,247
Realized credit loss (3)
- (1,546) - - - (1,546)
Securities (4)
(8,994) - - (31,982) - (40,976)
Woodstar Fund investments (5)
- - 17,610 - - 17,610
Derivatives (6)
40,734 95 5,817 4,353 (9,149) 41,850
Foreign currency (7)
(5,601) (15) 32 - - (5,584)
Earnings (loss) from unconsolidated entities (8)
1,324 (16) - 313 - 1,621
Sales of properties (9)
- - 39,150 - - 39,150
Distributable Earnings (Loss) $ 205,226 $ 20,445 $ 59,234 $ (948) $ (92,398) $ 191,559
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.63 $ 0.06 $ 0.18 $ - $ (0.28) $ 0.59
76
Table of Contents

The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended December 31, 2023, 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 $ 426,132 $ 64,363 $ 23,091 $ 48,490 $ 450 $ 562,526
Costs and expenses (289,347) (42,590) (29,148) (40,392) (108,660) (510,137)
Other income (loss) (23,363) 4,683 35,150 21,965 12,131 50,566
Income (loss) before income taxes 113,422 26,456 29,093 30,063 (96,079) 102,955
Income tax (provision) benefit
(14,991) 9 - (3,333) - (18,315)
Income attributable to non-controlling interests (4) - (12,007) (1,668) - (13,679)
Net income (loss) attributable to Starwood Property Trust, Inc. 98,427 26,465 17,086 25,062 (96,079) 70,961
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,659 - - 4,659
Non-controlling interests attributable to unrealized gains/losses - - 4,558 (2,546) - 2,012
Non-cash equity compensation expense 2,237 387 79 1,601 3,888 8,192
Management incentive fee - - - - 19,530 19,530
Depreciation and amortization 2,114 9 7,979 2,298 84 12,484
Interest income adjustment for securities 5,743 - - 8,125 - 13,868
Consolidated income tax provision (benefit) associated with fair value adjustments
14,991 (9) - 3,333 - 18,315
Other non-cash items 5 - 269 (198) - 76
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (151,264) - - (22,685) - (173,949)
Credit loss provision, net 25,281 694 - - - 25,975
Securities (6,493) - - 5,676 - (817)
Woodstar Fund investments - - (37,548) - - (37,548)
Derivatives 157,892 121 2,337 8,817 (12,131) 157,036
Foreign currency (78,762) (426) 61 - - (79,127)
(Earnings) from unconsolidated entities
(847) (4,378) - (456) - (5,681)
Sales of properties - - - (10,215) - (10,215)
Impairment of properties
101,069 - - - - 101,069
Recognition of Distributable realized gains /
(losses) on:
Loans (2)
(541) - - 21,326 - 20,785
Realized credit loss recovery (3)
2,370 311 - - - 2,681
Securities (4)
54 - - (3,432) - (3,378)
Woodstar Fund investments (5)
- - 16,115 - - 16,115
Derivatives (6)
34,120 102 6,619 (4,297) (9,222) 27,322
Foreign currency (7)
(2,084) 53 (60) - - (2,091)
Earnings from unconsolidated entities (8)
847 93 - 427 - 1,367
Sales of properties (9)
- - - (198) - (198)
Distributable Earnings (Loss) $ 205,159 $ 23,422 $ 22,154 $ 32,638 $ (93,930) $ 189,443
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.63 $ 0.07 $ 0.07 $ 0.10 $ (0.29) $ 0.58

77
Table of Contents

The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended March 31, 2023, 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 $ 410,606 $ 56,314 $ 23,798 $ 40,162 $ 278 $ 531,158
Costs and expenses (274,415) (49,224) (27,208) (33,859) (100,846) (485,552)
Other income (loss) 2,032 1,764 11,762 (16,468) 6,270 5,360
Income (loss) before income taxes 138,223 8,854 8,352 (10,165) (94,298) 50,966
Income tax benefit
6,557 46 - 2,192 - 8,795
Income attributable to non-controlling interests (3) - (6,978) (806) - (7,787)
Net income (loss) attributable to Starwood Property Trust, Inc. 144,777 8,900 1,374 (8,779) (94,298) 51,974
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units - - 4,691 - - 4,691
Non-controlling interests attributable to unrealized gains/losses - - (263) (2,798) - (3,061)
Non-cash equity compensation expense 2,087 312 74 1,595 6,868 10,936
Management incentive fee - - - - 12,365 12,365
Depreciation and amortization 1,742 20 8,185 2,771 - 12,718
Interest income adjustment for securities 5,220 - - 5,420 - 10,640
Extinguishment of debt, net - - - - (246) (246)
Consolidated income tax benefit associated with
fair value adjustments
(6,557) (46) - (2,192) - (8,795)
Other non-cash items (19) - 270 74 - 325
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (8,262) - - (639) - (8,901)
Credit loss provision, net
30,790 12,404 - - - 43,194
Securities (14,866) - - 14,459 - (407)
Woodstar Fund investments - - (12,965) - - (12,965)
Derivatives 34,363 51 1,217 3,467 (6,270) 32,828
Foreign currency (14,930) (75) (14) - - (15,019)
Earnings from unconsolidated entities
(939) (1,740) - (679) - (3,358)
Sales of properties - - - (190) - (190)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
(1,720) - - 1,763 - 43
Securities (4)
- - - (2,076) - (2,076)
Woodstar Fund investments(5)
- - 14,243 - - 14,243
Derivatives (6)
19,946 91 4,212 (111) (6,529) 17,609
Foreign currency (7)
(714) (30) 14 - - (730)
Earnings (loss) from unconsolidated entities (8)
939 (96) - 497 - 1,340
Sales of properties (9)
- - - 79 - 79
Distributable Earnings (Loss) $ 191,857 $ 19,791 $ 21,038 $ 12,661 $ (88,110) $ 157,237
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.60 $ 0.06 $ 0.06 $ 0.04 $ (0.27) $ 0.49
______________________________________________________________________________________________________________________

(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. 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)."
78
Table of Contents

(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.

79
Table of Contents

Three Months Ended March 31, 2024 Compared to the Three Months Ended December 31, 2023

Commercial and Residential Lending Segment

The Commercial and Residential Lending Segment's Distributable Earnings were relatively unchanged at $205.2 million during both the first quarter of 2024 and the fourth quarter of 2023. After making adjustments for the calculation of Distributable Earnings, revenues were $436.3 million, costs and expenses were $253.8 million, other income was $22.7 million and there was no income tax provision or benefit.

Revenues, consisting principally of interest income on loans, increased by $4.2 million in the first quarter of 2024, primarily due to an increase in interest income from loans of $3.6 million. The increase in interest income from loans reflects (i) a $4.4 million increase from commercial loans reflecting higher prepayment related income, partially offset by the effects of lower average balances and interest rate spreads, and (ii) a $0.8 million decrease from residential loans reflecting lower average balances.

Costs and expenses decreased by $3.8 million in the first quarter of 2024, primarily due to (i) a $10.4 million decrease in interest expense associated with the various secured financing facilities used to fund a portion of this segment's investment portfolio, primarily reflecting lower average borrowings outstanding due to paydowns from excess cash balances, partially offset by (ii) a $3.2 million increase in general and administrative expenses and (iii) the nonrecurrence of a $2.4 million credit loss recovery on a commercial loan in the fourth quarter of 2023.

Other income decreased by $8.0 million in the first quarter of 2024, primarily due to a $10.9 million increase in recognized credit losses on RMBS investments and residential loans, partially offset by a $3.1 million increase in realized gains on derivatives which hedge our interest rate and foreign currency risks, net of an increase in realized foreign currency losses.

Infrastructure Lending Segment

The Infrastructure Lending Segment's Distributable Earnings decreased by $3.0 million, from $23.4 million during the fourth quarter of 2023 to $20.4 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings, revenues were $66.9 million, costs and expenses were $46.0 million and other loss was $0.5 million.

Revenues, consisting principally of interest income on loans, increased by $2.5 million in the first quarter of 2024, primarily due to an increase in interest income from loans of $2.5 million reflecting higher average loan balances and prepayment related income.

Costs and expenses increased by $4.8 million in the first quarter of 2024, primarily due to (i) a $1.8 million increase in general and administrative expenses, (ii) a $1.5 million credit loss recognized on an infrastructure loan classified as held-for-sale in the first quarter of 2024 and (iii) a $1.1 million increase in interest expense primarily due to higher average borrowings outstanding.

Other income decreased by $0.7 million to a loss in the first quarter of 2024, primarily due to a loss on extinguishment of debt.

Property Segment

Distributable Earnings by Portfolio (amounts in thousands)
For the Three Months Ended
March 31, 2024 December 31, 2023 Change
Master Lease Portfolio $ 40,788 $ 4,973 $ 35,815
Medical Office Portfolio 5,116 4,719 397
Woodstar Fund, net of non-controlling interests 14,332 13,334 998
Other/Corporate (1,002) (872) (130)
Distributable Earnings $ 59,234 $ 22,154 $ 37,080

The Property Segment's Distributable Earnings increased by $37.0 million, from $22.2 million during the fourth quarter of 2023 to $59.2 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings, revenues were $21.3 million, costs and expenses were $22.4 million, other income was $63.5 million and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $3.2 million.

80
Table of Contents

Revenues decreased by $2.2 million in the first quarter of 2024, primarily due to the sale of our Master Lease Portfolio on February 29, 2024.

Costs and expenses were relatively unchanged in the first quarter of 2024.

Other income increased by $39.7 million in the first quarter of 2024 primarily due to a $37.4 million net gain on sale of our Master Lease Portfolio.

Income attributable to non-controlling interests in the Woodstar Fund increased by $0.5 million in the first quarter of 2024.

Investing and Servicing Segment

The Investing and Servicing Segment's Distributable Earnings decreased by $33.5 million, from earnings of $32.6 million during the fourth quarter of 2023 to a loss of $0.9 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings (Loss), revenues were $52.2 million, costs and expenses were $32.7 million, other loss was $19.0 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $1.4 million.

Revenues decreased by $4.6 million in the first quarter of 2024, primarily due to a $2.2 million net decrease in interest income from conduit loans and CMBS investments and a $1.4 million decrease in servicing fees. 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 the trust's 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 $4.1 million in the first quarter of 2024, primarily due to decreases of $2.1 million in general and administrative expenses and $1.5 million in interest expense, both primarily related to loan securitization activity.

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 $35.9 million to a loss in the first quarter of 2024, primarily due to a $27.4 million increase in recognized credit losses on CMBS, a $9.7 million decrease in realized gains on conduit loans and a $6.5 million unfavorable change in fair value of servicing rights, all partially offset by an $8.6 million favorable change in realized gains (losses) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.

Income attributable to non-controlling interests decreased $2.9 million in the first quarter of 2024, primarily due to non-controlling interests in decreased income of a consolidated CMBS joint venture.

Corporate

Corporate loss decreased by $1.5 million, from $93.9 million during the fourth quarter of 2023 to $92.4 million in the first quarter of 2024, primarily due to a $1.3 million decrease in interest expense.


81
Table of Contents

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023
Commercial and Residential Lending Segment
The Commercial and Residential Lending Segment's Distributable Earnings increased by $13.3 million, from $191.9 million during the first quarter of 2023 to $205.2 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings, revenues were $436.3 million, costs and expenses were $253.8 million, other income was $22.7 million and there was no income tax provision or benefit.
Revenues, consisting principally of interest income on loans, increased by $20.3 million in the first quarter of 2024, primarily due to an increase in interest income from loans of $18.9 million. The increase in interest income from loans reflects (i) a $21.3 million increase from commercial loans, reflecting higher average index rates and prepayment related income, partially offset by lower average loan balances, and (ii) a $2.4 million decrease from residential loans principally due to lower average balances.
Costs and expenses increased by $13.8 million in the first quarter of 2024, primarily due to (i) a $9.8 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 index rates, and (ii) a $4.8 million increase in general and administrative expenses, primarily for compensation and professional fees.
Other income increased by $6.8 million in the first quarter of 2024, primarily due to a $15.9 million increase in realized gains on derivatives which hedge our interest rate and foreign currency hedges, net of an increase in realized foreign currency losses, partially offset by a $9.7 million increase in recognized credit losses on RMBS investments and residential loans.
Infrastructure Lending Segment
The Infrastructure Lending Segment's Distributable Earnings increased by $0.6 million, from $19.8 million during the first quarter of 2023 to $20.4 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings, revenues were $66.9 million, costs and expenses were $46.0 million and other loss was $0.5 million.
Revenues, consisting principally of interest income on loans, increased by $10.6 million in the first quarter of 2024, primarily due to an increase in interest income from loans of $11.6 million, reflecting higher average loan balances and index rates, partially offset by a $1.2 million decrease in interest income from investment securities, primarily due to lower average balances resulting from repayments.
Costs and expenses increased by $9.5 million in the first quarter of 2024, primarily due to a $6.2 million increase in interest expense, reflecting higher average index rates and borrowings outstanding, a $1.8 million increase in general and administrative expenses and a $1.5 million credit loss recognized on an infrastructure loan classified as held-for-sale in the first quarter of 2024.
Other loss increased by $0.5 million in the first quarter of 2024, primarily due to a loss on extinguishment of debt.
Property Segment
Distributable Earnings by Portfolio (amounts in thousands)
For the Three Months Ended March 31,
2024 2023 Change
Master Lease Portfolio $ 40,788 $ 5,029 $ 35,759
Medical Office Portfolio 5,116 5,034 82
Woodstar Fund, net of non-controlling interests 14,332 11,667 2,665
Other/Corporate (1,002) (692) (310)
Distributable Earnings $ 59,234 $ 21,038 $ 38,196
The Property Segment's Distributable Earnings increased by $38.2 million, from $21.0 million during the first quarter of 2023 to $59.2 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings, revenues were $21.3 million, costs and expenses were $22.4 million, other income was $63.5 million and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $3.2 million.
82
Table of Contents

Revenues decreased by $2.9 million in the first quarter of 2024, primarily due to the sale of our Master Lease Portfolio on February 29, 2024.
Costs and expenses increased by $2.6 million in the first quarter of 2024, primarily due to a $2.5 million increase in interest expense of our Medical Office Portfolio, reflecting higher index rates on variable rate borrowings.
Other income increased by $44.4 million in the first quarter of 2024 primarily due to (i) a $37.4 million net gain on sale of our Master Lease Portfolio, (ii) a $3.4 million increase in income from the Woodstar Fund and (iii) a $3.1 million increase in realized gain on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio.
Income attributable to non-controlling interests in the Woodstar Fund increased $0.7 million in the first quarter of 2024.
Investing and Servicing Segment
The Investing and Servicing Segment's Distributable Earnings decreased by $13.6 million from earnings of $12.7 million during the first quarter of 2023 to a loss of $0.9 million in the first quarter of 2024. After making adjustments for the calculation of Distributable Earnings (Loss), revenues were $52.2 million, costs and expenses were $32.7 million, other loss was $19.0 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $1.4 million.
Revenues increased by $6.4 million in the first quarter of 2024, primarily due to a $5.0 million increase in interest income from CMBS investments and conduit loans, a $3.2 million increase in servicing fees principally related to loan modifications, partially offset by a $2.2 million decrease in rental income due to fewer operating properties held.
Costs and expenses increased by $3.1 million in the first quarter of 2024, primarily due to a $3.4 million increase in general and administrative expenses reflecting increased incentive compensation due to higher loan securitization volume.
Other income decreased by $19.2 million to a loss in the first quarter of 2024, primarily due to (i) a $28.8 million increase in recognized credit losses on CMBS and (ii) a $3.3 million greater decrease in fair value of servicing rights, partially offset by (iii) a $9.9 million increase in realized gains on conduit loans and (iv) a $4.5 million favorable change in realized gain (loss) on derivatives which primarily hedge our interest rate risk on CMBS investments and conduit loans.
Income attributable to non-controlling interests decreased $2.3 million, primarily due to non-controlling interests in decreased income of a consolidated CMBS joint venture.
Corporate
Corporate loss increased by $4.3 million, from $88.1 million during the first quarter of 2023 to $92.4 million in the first quarter of 2024, primarily due to (i) a $3.2 million increase in interest expense reflecting higher average unsecured borrowings outstanding, as well as higher index rates on our secured term loans, and (ii) a $2.6 million increase in realized losses on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes, partially offset by (iii) a $1.3 million decrease in general and administrative expenses.

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, 2023. Refer to our Form 10-K for a description of these strategies.
83
Table of Contents

Sources of Liquidity
Our primary sources of liquidity are as follows:
Cash Flows for the Three Months Ended March 31, 2024 (amounts in thousands)
GAAP VIE
Adjustments 		Excluding Securitization VIEs
Net cash provided by operating activities
$ 55,949 $ - $ 55,949
Cash Flows from Investing Activities:
Origination, purchase and funding of loans held-for-investment (265,185) - (265,185)
Proceeds from principal collections on loans
1,220,995 - 1,220,995
Purchase and funding of investment securities (9,220) - (9,220)
Proceeds from sales, redemptions and collections of investment securities
20,463 18,188 38,651
Proceeds from sales of real estate 188,040 - 188,040
Purchases and additions to properties and other assets (5,576) - (5,576)
Net cash flows from other investments and assets 16,144 - 16,144
Net cash provided by investing activities
1,165,661 18,188 1,183,849
Cash Flows from Financing Activities:
Proceeds from borrowings 1,234,980 - 1,234,980
Principal repayments on and repurchases of borrowings (2,165,427) (108) (2,165,535)
Payment of deferred financing costs (6,574) - (6,574)
Proceeds from common stock issuances
1,400 - 1,400
Payment of dividends (152,305) - (152,305)
Distributions to non-controlling interests (9,987) - (9,987)
Issuance of debt of consolidated VIEs 3,166 (3,166) -
Repayment of debt of consolidated VIEs (108) 108 -
Distributions of cash from consolidated VIEs 15,022 (15,022) -
Net cash used in financing activities
(1,079,833) (18,188) (1,098,021)
Net increase in cash, cash equivalents and restricted cash
141,777 - 141,777
Cash, cash equivalents and restricted cash, beginning of period 311,972 - 311,972
Effect of exchange rate changes on cash (1,045) - (1,045)
Cash, cash equivalents and restricted cash, end of period $ 452,704 $ - $ 452,704
The discussion below is on a non-GAAP basis, after removing adjustments principally resulting from the consolidation of the securitization VIEs under ASC 810. These adjustments principally relate to (i) the purchase of CMBS, RMBS, loans and real estate from consolidated VIEs, which are reflected as repayments of VIE debt on a GAAP basis and (ii) sales, principal collections and redemptions of CMBS and RMBS related to consolidated VIEs, which are reflected as VIE distributions on a GAAP basis. There is no net impact to overall cash resulting from these consolidations. Refer to Note 2 to the Condensed Consolidated Financial Statements for further discussion.
Cash and cash equivalents increased by $141.8 million during the three months ended March 31, 2024, reflecting net cash provided by investing activities of $1.2 billion and net cash provided by operating activities of $55.9 million, partially offset by net cash used in financing activities of $1.1 billion.
Net cash provided by operating activities of $55.9 million during the three months ended March 31, 2024 related primarily to cash interest income of $427.4 million from our loans and $47.8 million from our investment securities, receipts from our interest rate derivatives of $26.9 million, net rental income of $17.3 million, distributions from our affordable housing fund investments of $13.3 million, and servicing fees of $12.1 million. Offsetting these cash inflows was cash interest expense of $367.1 million, general and administrative expenses of $80.7 million, originations and purchases of loans held-for-sale, net of sales and principal collections of $24.7 million, and a net change in operating assets and liabilities of $27.5 million.
Net cash provided by investing activities of $1.2 billion for the three months ended March 31, 2024 related primarily to proceeds received from principal collections and sale of loans held-for-investment of $1.2 billion and net proceeds from the
84
Table of Contents

sale of our Master Lease Portfolio of $188.0 million, partially offset by the origination, purchase and funding of loans held-for-investment of $265.2 million.
Net cash used in financing activities of $1.1 billion for the three months ended March 31, 2024 related primarily to payments on our debt and deferred financing costs, net of borrowings, of $937.1 million and dividend distributions of $152.3 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 March 31, 2024 and December 31, 2023 (dollars in thousands):
Face
Amount 		Carrying
Value 		Asset Specific
Financing 		Net
Investment 		Unlevered
Return on
Asset (6)
March 31, 2024
First mortgages (1) $ 14,133,131 $ 14,098,699 $ 8,807,008 $ 5,291,691 9.3 %
Subordinated mortgages (2) 77,619 77,495 - 77,495 16.1 %
Mezzanine loans (1) 298,400 296,699 - 296,699 14.3 %
Other loans 71,187 70,666 - 70,666 12.6 %
Loans held-for-sale, fair value option, residential 2,863,512 2,518,600 2,268,493 250,107 4.5 % (5)
RMBS, available-for-sale 189,960 100,319 18,604 81,715 10.3 %
RMBS, fair value option 326,274 434,916 (3) 147,043 287,873 19.7 %
HTM debt securities (4) 580,088 578,090 129,776 448,314 10.2 %
Credit loss allowance N/A (329,597) - (329,597)
Equity security 7,880 7,265 - 7,265
Investments in unconsolidated entities N/A 25,371 - 25,371
Properties, net N/A 434,365 87,750 346,615
$ 18,548,051 $ 18,312,888 $ 11,458,674 $ 6,854,214
December 31, 2023
First mortgages (1) $ 14,996,627 $ 14,947,446 $ 10,223,439 $ 4,724,007 9.4 %
Subordinated mortgages (2) 76,882 76,560 - 76,560 16.0 %
Mezzanine loans (1) 274,899 273,146 - 273,146 14.0 %
Other loans 71,843 71,012 - 71,012 12.5 %
Loans held-for-sale, fair value option, residential 2,909,126 2,604,594 2,286,070 318,524 4.5 % (5)
RMBS, available-for-sale 191,916 102,368 18,638 83,730 10.1 %
RMBS, fair value option 326,274 449,909 (3) 147,428 302,481 19.6 %
HTM debt securities (4) 592,542 590,274 133,142 457,132 10.1 %
Credit loss allowance N/A (301,837) - (301,837)
Equity security 9,226 8,340 - 8,340
Investments in unconsolidated entities N/A 19,151 - 19,151
Properties, net N/A 431,155 234,889 196,266
$ 19,449,335 $ 19,272,118 $ 13,043,606 $ 6,228,512
__________________________________________
(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 $1.0 billion being classified as first mortgages as of both March 31, 2024 and December 31, 2023.
(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.
85
Table of Contents

(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 March 31, 2024 and December 31, 2023, 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 March 31, 2024 December 31, 2023
Multifamily 37.2 % 37.1 %
Office 23.8 % 22.4 %
Hotel 14.3 % 14.3 %
Mixed Use 7.5 % 7.2 %
Industrial 5.9 % 8.0 %
Residential 1.8 % 1.7 %
Retail 1.4 % 1.4 %
Other 8.1 % 7.9 %
100.0 % 100.0 %

Geographic Location March 31, 2024 December 31, 2023
U.S. Regions:
North East 17.6 % 16.4 %
South East 17.3 % 16.3 %
South West 15.9 % 15.2 %
Mid Atlantic 10.2 % 9.7 %
West 8.8 % 8.9 %
Midwest 2.1 % 2.4 %
International:
United Kingdom 12.1 % 12.9 %
Australia 8.4 % 8.2 %
Other Europe 5.6 % 8.1 %
Bahamas/Bermuda 2.0 % 1.9 %
100.0 % 100.0 %
86
Table of Contents

Infrastructure Lending Segment
The following table sets forth the amount of each category of investments we owned within our Infrastructure Lending Segment as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Face
Amount 		Carrying
Value 		Asset Specific
Financing 		Net
Investment 		Unlevered
Return on
Asset (1)
March 31, 2024
First priority infrastructure loans and HTM securities $ 2,468,407 $ 2,414,251 $ 1,845,710 $ 568,541 10.0 %
Loans held-for-sale, infrastructure
49,500 47,149 40,748 6,401 N/A
Credit loss allowance N/A (19,638) - (19,638)
Investments in unconsolidated entities N/A 53,018 - 53,018
$ 2,517,907 $ 2,494,780 $ 1,886,458 $ 608,322
December 31, 2023
First priority infrastructure loans and HTM securities $ 2,589,481 $ 2,535,047 $ 1,905,319 $ 629,728 10.0 %
Credit loss allowance N/A (20,345) - (20,345)
Investments in unconsolidated entities N/A 52,691 - 52,691
$ 2,589,481 $ 2,567,393 $ 1,905,319 $ 662,074
__________________________________________
(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 March 31, 2024 and December 31, 2023, our Infrastructure Lending Segment's investment portfolio had the following characteristics based on carrying values:
Collateral Type March 31, 2024 December 31, 2023
Power
55.4 % 55.1 %
Oil & gas - midstream 34.5 % 35.0 %
Oil & gas - downstream 7.2 % 7.0 %
Oil & gas - upstream
1.0 % 1.0 %
Other
1.9 % 1.9 %
100.0 % 100.0 %

Geographic Location March 31, 2024 December 31, 2023
U.S. Regions:
North East 31.2 % 32.5 %
South West 29.4 % 27.6 %
Midwest 19.7 % 19.4 %
South East 10.9 % 10.1 %
West 4.4 % 4.3 %
Mid-Atlantic 1.9 % 1.7 %
Other - % 2.0 %
International:
United Kingdom
2.1 % 2.0 %
Mexico 0.4 % 0.4 %
100.0 % 100.0 %
87
Table of Contents

Property Segment
The following table sets forth the amount of each category of investments held within our Property Segment as of March 31, 2024 and December 31, 2023 (amounts in thousands):
March 31, 2024 December 31, 2023
Properties, net $ 551,502 $ 555,455
Properties held-for-sale, net
- 290,937
Lease intangibles, net 23,686 24,560
Woodstar Fund 2,008,937 2,012,833
$ 2,584,125 $ 2,883,785
The following table sets forth our net investment and other information regarding the Property Segment's properties and lease intangibles as of March 31, 2024 (dollars in thousands):
Carrying
Value 		Asset
Specific
Financing 		Net
Investment 		Occupancy
Rate 		Weighted Average
Remaining
Lease Term
Office-Medical Office Portfolio, cost
$ 779,307 $ 598,850 $ 180,457 88.3 % 5.5 years
Accumulated depreciation and amortization (204,119) - (204,119)
Net carrying value $ 575,188 $ 598,850 $ (23,662)
As of March 31, 2024 and December 31, 2023, our Property Segment's investment portfolio had the following geographic characteristics based on carrying values:

Geographic Location March 31, 2024 December 31, 2023
South East 87.4 % 82.8 %
North East 4.5 % 4.2 %
South West 3.1 % 4.7 %
West 2.6 % 3.6 %
Midwest 2.4 % 4.7 %
100.0 % 100.0 %
88
Table of Contents

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 March 31, 2024 and December 31, 2023 (amounts in thousands):
Face
Amount 		Carrying
Value 		Asset
Specific
Financing 		Net
Investment
March 31, 2024
CMBS, fair value option $ 2,693,108 $ 1,124,724 (1) $ 397,019 (2) $ 727,705
Intangible assets - servicing rights N/A 53,868 (3) - 53,868
Lease intangibles, net N/A 5,856 - 5,856
Loans held-for-sale, fair value option, commercial 126,955 123,619 55,878 67,741
Loans held-for-investment 9,200 9,200 - 9,200
Investments in unconsolidated entities N/A 33,154 (4) - 33,154
Properties, net N/A 58,698 68,502 (9,804)
$ 2,829,263 $ 1,409,119 $ 521,399 $ 887,720
December 31, 2023
CMBS, fair value option $ 2,729,194 $ 1,147,550 (1) $ 401,059 (2) $ 746,491
Intangible assets - servicing rights N/A 57,249 (3) - 57,249
Lease intangibles, net N/A 6,155 - 6,155
Loans held-for-sale, fair value option, commercial 45,400 41,043 26,014 15,029
Loans held-for-investment 9,200 9,200 - 9,200
Investments in unconsolidated entities N/A 33,134 (4) - 33,134
Properties, net N/A 59,774 68,784 (9,010)
$ 2,783,794 $ 1,354,105 $ 495,857 $ 858,248
______________________________________________

(1)Includes $1.11 billion and $1.13 billion of CMBS eliminated in consolidation against VIE liabilities pursuant to ASC 810 as of March 31, 2024 and December 31, 2023, respectively. Also includes $171.1 million and $177.3 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of March 31, 2024 and December 31, 2023, respectively.
(2)Includes $32.2 million and $33.0 million of non-controlling interests in the consolidated entities which hold certain debt balances as of March 31, 2024 and December 31, 2023, respectively.
(3)Includes $34.3 million and $37.9 million of servicing rights intangibles eliminated in consolidation against VIE assets pursuant to ASC 810 as of March 31, 2024 and December 31, 2023, respectively.
(4)Includes $14.6 million of investments in unconsolidated entities eliminated in consolidation against VIE assets pursuant to ASC 810 as of both March 31, 2024 and December 31, 2023, respectively.
89
Table of Contents

Our REIS Equity Portfolio, as described in Note 6 to the Condensed Consolidated Financial Statements, had the following characteristics based on carrying values as of March 31, 2024 and December 31, 2023, respectively:
Property Type March 31, 2024 December 31, 2023
Office 45.7 % 46.1 %
Retail 30.0 % 29.7 %
Mixed Use 20.3 % 20.0 %
Hotel 4.0 % 4.2 %
100.0 % 100.0 %

Geographic Location March 31, 2024 December 31, 2023
West 35.4 % 35.3 %
North East 30.7 % 30.8 %
Midwest 19.8 % 19.9 %
South West 14.1 % 14.0 %
100.0 % 100.0 %

90
Table of Contents

Secured Borrowings
The following table is a summary of our secured borrowings as of March 31, 2024 (dollars in thousands):
Current
Maturity
Extended
Maturity (a)
Weighted
Average
Pricing 		Pledged
Asset
Carrying
Value 		Maximum
Facility
Size 		Outstanding
Balance
Approved
but
Undrawn
Capacity (b)
Unallocated
Financing
Amount (c)
Repurchase Agreements:
Commercial Loans Jun 2024 to Dec 2028
(d)
Oct 2025 to Dec 2030
(d)
Index + 2.05%
(e)
$ 9,736,328 $ 12,234,452
(f)
$ 6,010,151 $ 952,461 $ 5,271,840
Residential Loans Mar 2025 to Feb 2026 Mar 2025 to Apr 2026
SOFR + 1.90%
2,516,364 3,450,000 2,269,811 21,884 1,158,305
Infrastructure Loans Sep 2024 Sep 2026
SOFR + 2.07%
571,784 650,000 475,763 - 174,237
Conduit Loans Dec 2024 to Jun 2026 Dec 2025 to Jun 2027
SOFR + 2.15%
72,402 375,000 56,507 - 318,493
CMBS/RMBS Dec 2024 to Apr 2032
(g)
Mar 2025 to Oct 2032
(g)
(h) 1,397,945 990,460 706,459
(i)
47,961 236,040
Total Repurchase Agreements 14,294,823 17,699,912 9,518,691 1,022,306 7,158,915
Other Secured Financing:
Borrowing Base Facility Nov 2024 Oct 2026
SOFR + 2.11%
104,276 750,000
(j)
5,384 58,670 685,946
Commercial Financing Facilities Jul 2024 to Aug 2028 Jul 2025 to Dec 2030
Index + 2.24%
580,687 571,030
(k)
408,210 - 162,820
Infrastructure Financing Facilities Jul 2025 to Oct 2025 Oct 2027 to Jul 2032
Index + 2.15%
818,997 1,050,000 594,211 67,644 388,145
Property Mortgages - Fixed rate Oct 2025 to Jun 2026 N/A 4.52% 32,436 29,797 29,797 - -
Property Mortgages - Variable rate Nov 2024 to Dec 2025 N/A (l) 677,616 707,941 705,916 - 2,025
Term Loans and Revolver (m) N/A (m) N/A
(m)
1,513,281 1,363,281 150,000 -
STWD 2022-FL3 CLO Nov 2038 N/A
SOFR + 1.64%
1,007,284 840,620 840,620 - -
STWD 2021-HTS SASB Apr 2034 N/A
SOFR + 2.42%
216,750 195,576 195,576 - -
STWD 2021-FL2 CLO Apr 2038 N/A
SOFR + 1.63%
1,216,834 988,749 988,749 - -
STWD 2019-FL1 CLO Jul 2038 N/A
SOFR + 1.83%
553,096 386,381 386,381 - -
STWD 2021-SIF2 CLO Jan 2033 N/A
SOFR + 1.89%
514,678 410,000 410,000 - -
STWD 2021-SIF1 CLO Apr 2032 N/A
SOFR + 2.07%
515,246 410,000 410,000 - -
Total Other Secured Financing 6,237,900 7,853,375 6,338,125 276,314 1,238,936
$ 20,532,723 $ 25,553,287 $ 15,856,816 $ 1,298,620 $ 8,397,851
Unamortized net discount (23,530)
Unamortized deferred financing costs (52,932)
$ 15,780,354
___________________________________________
(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 March 31, 2024 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 $11.8 billion may be increased to $12.2 billion, subject to certain conditions. The $12.2 billion amount includes such upsizes.
(g)Certain facilities with an outstanding balance of $330.9 million as of March 31, 2024 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 $279.0 million as of March 31, 2024 has a weighted average fixed annual interest rate of 3.54%. All other facilities are variable rate with a weighted average rate of SOFR + 2.19%.
(i)Includes: (i) $279.0 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $32.2 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 March 31, 2024 of $450.0 million may be increased to $750.0 million, subject to certain conditions.
91
Table of Contents

(k)Certain facilities with an aggregate initial maximum facility size of $471.0 million may be increased to $571.0 million, subject to certain conditions. The $571.0 million amount includes such upsizes.
(l)Includes a $600.0 million first mortgage and mezzanine loan secured by our Medical Office Portfolio. This debt has a weighted average interest rate of SOFR + 2.18% that we swapped to a fixed rate of 3.46%. The remainder have a weighted average rate of SOFR + 2.73%.
(m)Consists of: (i) a $770.8 million term loan facility that matures in July 2026, of which $382.0 million has an annual interest rate of SOFR + 2.60% and $388.8 million has an annual interest rate of SOFR + 3.35%, subject to a 0.75% SOFR floor, (ii) a $150.0 million revolving credit facility that matures in April 2026 with an annual interest rate of SOFR + 2.60%, and (iii) a $592.5 million term loan facility that matures in November 2027, with an annual interest rate of SOFR + 3.25%, subject to a 0.50% SOFR floor. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $5.9 billion as of March 31, 2024.

The above table no longer reflects property mortgages of the Woodstar Portfolios which, as discussed in Notes 2 and 7 to the Condensed Consolidated Financial Statements, are now reflected within "Investments of consolidated affordable housing fund" on our condensed consolidated balance sheets.
Refer to Note 10 to the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our secured financing arrangements.
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, 2023 17,643,891 17,493,558 150,333
March 31, 2024 15,856,816 17,090,987 (1,234,171)
(a)
__________________________________________________

(a)Variance primarily related to secured debt pay downs from unsecured senior note issuance and the sale of the Master Lease Portfolio.
Borrowings under Unsecured Senior Notes
During the three months ended March 31, 2024 and 2023, the weighted average effective borrowing rate on our unsecured senior notes was 5.1% and 4.7%, 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 March 31, 2024. 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
Second Quarter 2024 $ 300,780 $ 38,547 $ (185,677) $ 153,650
Third Quarter 2024 212,445 7,144 (140,546) 79,043
Fourth Quarter 2024 410,175 69,434 (1,391,166) (911,557) (1)
First Quarter 2025 407,284 79,076 (1,573,647) (1,087,287) (2)
Total $ 1,330,684 $ 194,201 $ (3,291,036) $ (1,766,151)


92
Table of Contents

______________________________________________________________________________________________________________________

(1)Shortfall primarily relates to (i) $600.0 million related to outstanding debt on our Medical Office Portfolio that we priced the refinancing of subsequent to March 31, 2024 (see Note 24) and (ii) $400.0 million of our unsecured senior notes that mature in December 2024 that we intend to repay with funds generated in the normal course of business.
(2)Shortfall primarily relates to (i) $500.0 million of our unsecured senior notes that mature in March 2025 that we intend to repay with funds generated in the normal course of business, (ii) $330.9 million of repayments under securities facilities which carry a rolling 12-month term that we have historically extended, and intend to continue to extend with lender's consent and (iii) $284.2 million of repayments under a Residential Loans repurchase facility which carries a one-year term that we extend every three months with lender's consent.
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 March 31, 2024, we had 100,000,000 shares of preferred stock available for issuance and 184,043,235 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, 2023. 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 our Form 10-K for a detailed dividend history.

The Company's board of directors declared the following dividends during the three months ended March 31, 2024:

Declaration Date Record Date Payment Date Amount Frequency
3/15/24 3/29/24 4/15/24 $ 0.48 Quarterly
93
Table of Contents

Contractual Obligations and Commitments
Our material contractual obligations and commitments as of March 31, 2024 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) $ 12,625,490 $ 1,436,033 $ 3,941,513 $ 5,744,587 $ 1,503,357
CLOs and SASB (b) 3,231,326 438,807 2,438,143 279,801 74,575
Unsecured senior notes 2,780,750 900,000 900,000 380,750 600,000
Future loan commitments:
Commercial Lending (c) 1,097,782 713,205 384,490 87 -
Infrastructure Lending (d) 183,164 158,618 24,546 - -
__________________________________________________

(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 $278.0 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 $117.1 million under revolvers and letters of credit and $66.1 million under delayed draw term loans.
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, CLOs and SASB 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.
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, 2023.
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.
94
Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk
We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock. While we do not seek to avoid risk completely, we believe the risk can be quantified from historical experience and seek to actively manage that risk, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake. Our strategies for managing risk and our exposure to such risks, as described in Item 7A of our Form 10-K, have not changed materially since December 31, 2023 except as described below.
Credit Risk
Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the owners' ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.
We seek to further manage credit risk associated with our Investing and Servicing Segment loans held-for-sale through the purchase of credit instruments. The following table presents our credit instruments as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Face Value of
Loans Held-for-Sale 		Aggregate Notional Value of
Credit Instruments 		Number of
Credit Instruments
March 31, 2024 $ 126,955 $ 49,000 3
December 31, 2023 $ 45,400 $ 49,000 3
Interest Rate Risk
Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our investments and the related financing obligations. In general, we seek to match the interest rate characteristics of our investments with the interest rate characteristics of any related financing obligations such as repurchase agreements, bank credit facilities, term loans, revolving facilities and securitizations. In instances where the interest rate characteristics of an investment and the related financing obligation are not matched, we mitigate such interest rate risk through the utilization of interest rate derivatives of the same duration. The following table presents financial instruments where we have utilized interest rate derivatives to hedge interest rate risk and the related interest rate derivatives as of March 31, 2024 and December 31, 2023 (dollars in thousands):
Face Value of
Hedged Instruments 		Aggregate Notional Value of
Credit Instruments 		Number of
Credit Instruments
Instrument hedged as of March 31, 2024
Loans held-for-sale $ 2,990,467 $ 3,715,500 52
RMBS, available-for-sale 189,960 85,000 2
CMBS, fair value option 65,738 81,300 3
HTM debt securities 9,100 9,100 1
Secured financing agreements 715,854 1,357,537 8
Unsecured senior notes 1,600,000 1,570,000 3
$ 5,571,119 $ 6,818,437 69
Instrument hedged as of December 31, 2023
Loans held-for-sale $ 2,954,526 $ 3,646,500 43
RMBS, available-for-sale 191,916 85,000 2
CMBS, fair value option 67,433 58,800 2
HTM debt securities 9,629 9,629 1
Secured financing agreements 716,786 1,358,775 8
Unsecured senior notes 1,000,000 970,000 2
$ 4,940,290 $ 6,128,704 58
95
Table of Contents

The following table summarizes the estimated annual change in net investment income for our variable rate investments and our variable rate debt assuming increases or decreases in SOFR or other applicable index rates and adjusted for the effects of our interest rate hedging activities (amounts in thousands):
Income (Expense) Subject to Interest Rate Sensitivity Variable rate
investments and
indebtedness (1) 		1.00% Decrease 0.50% Decrease 0.25% Decrease 0.25% Increase
Investment income from variable rate investments $ 16,801,153 $ (165,131) $ (83,082) $ (41,810) $ 41,810
Interest expense from variable rate debt, net of interest rate derivatives (8,814,575) 119,546 59,773 29,886 (29,886)
Net investment income from variable rate instruments $ 7,986,578 $ (45,585) $ (23,309) $ (11,924) $ 11,924
______________________________________________________________________________________________________________________
(1)Includes the notional value of interest rate derivatives.
Foreign Currency Risk
Our loans and investments that are denominated in a foreign currency are also subject to risks related to fluctuations in exchange rates. We generally mitigate this exposure by matching the currency of our foreign currency assets to the currency of the borrowings that finance those assets. As a result, we substantially reduce our exposure to changes in portfolio value related to changes in foreign exchange rates.
We intend to hedge our net currency exposures in a prudent manner. However, our currency hedging strategies may not eliminate all of our currency risk due to, among other things, uncertainties in the timing and/or amount of payments received on the related investments, and/or unequal, inaccurate, or unavailable hedges to perfectly offset changes in future exchange rates. Additionally, we may be required under certain circumstances to collateralize our currency hedges for the benefit of the hedge counterparty, which could adversely affect our liquidity.
Consistent with our strategy of hedging foreign currency exposure on certain investments, we typically enter into a series of forwards to fix the U.S. dollar amount of foreign currency denominated cash flows (interest income and principal payments) we expect to receive from our foreign currency denominated investments. Accordingly, the notional values and expiration dates of our foreign currency hedges approximate the amounts and timing of future payments we expect to receive on the related investments.
The following table represents our assets and liabilities that are denominated in Pounds Sterling ("GBP"), Euros ("EUR"), Australian dollars ("AUD") and Swiss Francs ("CHF"), as well as our expected future net interest receipts (amounts in thousands):
March 31, 2024
GBP EUR AUD CHF
Foreign currency assets £ 1,506,124 € 735,294 A$ 1,961,174 Fr. 64,805
Foreign currency liabilities (1,104,200) (327,733) (1,369,637) (47,474)
Foreign currency contracts - notional, net (483,611) (439,598) (800,289) (20,900)
Subtotal (1)
£ (81,687) € (32,037) A$ (208,752) Fr. (3,569)
______________________________________________________________________________________________________________________

(1) Primarily relates to expected net interest cash flows on the respective assets and liabilities over their term.

Substantially all of our net asset exposure to the GBP, EUR, AUD and CHF has been hedged with foreign currency forward contracts as of March 31, 2024, as indicated in the table above. Refer to Note 13 of the Condensed Consolidated Financial Statements for further detail regarding our foreign currency derivatives and their contractual maturities.
96
Table of Contents


Item 4. Controls and Procedures.
Disclosure Controls and Procedures.We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting.No change in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
97
Table of Contents

PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
Currently, no material legal proceedings are pending or, to our knowledge, threatened or contemplated against us, that could have a material adverse effect on our business, financial position or results of operations.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in our Form 10-K.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
There were no unregistered sales of securities or issuer purchases of equity securities during the three months ended March 31, 2024.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
98
Table of Contents

Item 6. Exhibits.
(a)Index to Exhibits
INDEX TO EXHIBITS
Exhibit No. Description
4.1
31.1
Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2
Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
99
Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STARWOOD PROPERTY TRUST, INC.
Date: May 8, 2024 By:
/s/ BARRY S. STERNLICHT
Barry S. Sternlicht
Chief Executive Officer
Principal Executive Officer
Date: May 8, 2024 By:
/s/ RINA PANIRY
Rina Paniry
Chief Financial Officer, Treasurer, Chief Accounting Officer and Principal Financial Officer

100