Starwood Property Trust Inc.

Greetings and welcome to the Starwood Property Trust third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Zach Tannenbaum, Head of Investor Relations. Thank you. You may begin.

Thank you, Operator. Good morning and welcome to Starwood Property Trust earnings call. This morning we filed our 10-Q and issued a press release with a presentation of our results, which are both available on our website and have been filed with the SEC. Before the call begins, I would like to remind everyone that certain statements made in the course of this call are forward-looking statements, which do not guarantee future events or performance. Please refer to our 10-Q and press release for cautionary factors related to these statements. Additionally, certain non-GAAP financial measures will be discussed on this call. For reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP, please refer to our press release filed this morning. Joining me on the call today are Barry Sternlich, the company's chairman and chief executive officer, Jeff DeModica, the company's president, and Reena Paneri, the company's chief financial officer. With that, I'm now going to turn the call over to Reena.

Thank you, Zach, and good morning, everyone. This quarter, we reported distributable earnings, or DE, of $149 million, or 40 cents per share. Gap net income was 19 cents per share. Our new net lease acquisition, which I will discuss further in my property segment remarks, contributed to lower gap earnings due to 4 cents of depreciation and lower distributable earnings due to 3 cents of dilution, in part because the new assets contributed to only a portion of the quarter while dividends were paid for the full quarter. We also experienced higher than normal cash drag given the $2.3 billion of capital raises we completed in the quarter. We expect earnings to normalize once this cash is deployed and our new acquisition increases its investment pace and completes the refinancing of its existing facilities. In the quarter, we committed 4.6 billion of new investments across our businesses, including 2.2 billion in net lease, 1.4 billion in commercial lending, and a record 791 million in infrastructure lending, bringing total assets to a record 29.9 billion at quarter end and demonstrating the continued diversification and strength of our unique multi-cylinder platform. I will begin my segment discussion this morning with commercial and residential lending, which contributed $159 million of DE to the quarter, or 43 cents per share. In commercial lending, we originated 1.4 billion of loans, of which nearly all was funded, along with another 219 million of pre-existing loan commitments. After repayments of 1.3 billion, including a $58 million office loan, This portfolio grew $271 million to $15.8 billion. On the topic of credit quality, we continue to resolve our higher risk-rated loans and foreclosed assets, which Jeff will discuss. We have $642 million of reserves, $469 million in CECL, and $173 million of previously taken REO impairments. These represent 3.8% of our lending and REO portfolios and translate to $1.73 per share of book value, which is already reflected in today's undepreciated book value of $19.39. You will notice in our 10Q that we classified a $33 million five-rated mezzanine loan on a Dublin office portfolio as credit deteriorated. The loan already maintains an adequate general reserve but in light of a pending loan modification, the reserve was reclassified from general to specific. Turning to residential lending, our on-balance sheet loan portfolio ended the quarter at $2.3 billion, consistent with last quarter, as $52 million of repayments were largely offset by $41 million of positive mark-to-market adjustments. Our retained RMBS portfolio remained relatively steady at $409 million. In our property segment, which now includes our newly acquired net lease platform, we reported DE of $28 million or 8 cents per share. On July 23rd, we completed the $2.2 billion acquisition of fundamental income property, which contributed $10 million of DE in the partial quarter from acquisition to quarter end. The purchase was treated as an asset acquisition for gap purposes which means the purchase price was allocated to properties and lease intangibles. The portfolio consists of 475 properties diversified across 61 industries and 43 states with a weighted average lease term of 17.1 years and occupancy of 100%. Two comments I would like to make on the accounting ramifications of this acquisition. First, from a GAAP perspective, you will see elevated depreciation and amortization levels. The impact was four cents for the partial period with this pace expected to accelerate as the business contributes fully to future quarters and as we acquire new assets. Second, from a DE perspective, we introduced a new gap to DE reconciling item for straight line rent, which is non-cash. In our Woodstar affordable multifamily portfolio, we refinanced 30% of the portfolio's assets with $614 million of new debt. Of this amount, $310 million repaid maturing debt and $302 million was received as incremental proceeds, evidencing the significant value growth in this book during our ownership period. The new debt carries a weighted average spread of SOFR plus 176 and a 10-year term. 368 million of this refinancing closed in the quarter, with the remaining closing in October. Our investing and servicing segment contributed $47 million of DE, or 12 cents per share, to the quarter. Our special servicer continued to benefit from elevated transfer volumes, which were once again dominated by office loans. Our named servicing portfolio ended the quarter at $99 billion. Active servicing balances rose to $10.6 billion due to $300 million of net transfers in, most of which were office, driving special servicing fees higher in the quarter. In our conduit starboard mortgage capital, we completed five securitizations totaling $222 million at profit margins consistent with historic levels. Our infrastructure lending segment contributed $32 million of DE, or 8 cents per share, to the quarter. We committed a record $791 million of loans, of which $678 million was funded, and received $691 million of repayments, leaving our portfolio balance steady at $3.1 billion. Subsequent to quarter end, we completed our sixth actively managed infrastructure CLO. a $500 million transaction that priced at a record low coupon of SOFR plus 172, further expanding our non-recourse capital base. Turning to liquidity and capitalization, we ended the quarter with $2.2 billion of total liquidity elevated due to our recent capital raises and cash-out refinancing. Our debt-to-undepreciated equity ratio remained stable at 2.5 times and we continue to maintain over $9 billion of available credit capacity across our business lines. During the quarter, we executed $3.9 billion of capital markets transactions, including $1.6 billion in term loan repricing at 175 basis points and 200 basis points over SOFR, two high-yield issuances, one for $550 million and one for $500 million at fixed rates of 5.75%, and 5.25%, a $700 million seven-year term loan B at 225 over SOFR, and a $534 million equity raise that was accretive to GAAP book value. These actions increased our average corporate debt maturity to 3.8 years, with only $400 million of corporate debt maturing between now and 2027. With that, I will now turn the call over to Jeff.