Starwood Property Trust (STWD) 1 Mar 232022 Q4 Earnings call transcript

Greetings and welcome to the Starwood Property Trust Fourth Quarter and Full Year 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Zach Tanenbaum, Head of Investor Relations for Starwood Property Trust. Thank you.

You may begin.

operator. you, Thank welcome and Property earnings Trust Good to call. morning Starwood the company This filed results with website. Commission; released to for earnings the posted its and its and the XX-K XXXX; financial its XX, its morning, supplement Exchange December quarter Form Securities ended website are documents company’s the section of Investor These www.starwoodpropertytrust.com. Relations on the available at

to in historical constitute the begins, and uncertainties statements results to I any factors actual materially call made could that to no statements. in forward-looking made from statements duty the of filings a from or of are to refer call management’s would statements company’s update course those this for described everyone materially based any this SEC may results in subject The statements. made trends cause maybe that risks Before differ current beliefs the not detailed forward-looking the a I are discussion information the expressed These during statements on expectations made undertakes differ more and based certain of could that today. number forward-looking call. and like you the to and company to course cause the actual on that of remind are and with forward-looking those implied

non-GAAP financial conference this certain Additionally, measures will on be call. discussed

at be in our financial financial presented intended with most with considered non-GAAP can accessed isolation in the measures information a with of not for SEC be filings information in to comparable presentation is the this through accordance to the Our of or as GAAP. GAAP www.sec.gov. measures substitute prepared these accordance Reconciliations

Sossen, Jeff going call Paniry, Barry call today Sternlicht, Officer; With now Executive Rina. and company’s over and the Chief Financial President; the to Rina company’s me Chief Andrew turn Officer. company’s am to that, Chief the Operating the Joining I the DiModica, Chairman company’s are on Officer; the

good everyone. and Thank you, morning, Zach,

consistent ago or $XXX year. demonstrated book XX,XXX portfolio, of $X.XX the for XX% year or platform performance our and later. DE with or distributable once share Florida year $XXX value Our at up plus million again the million affordable $X.XX X quarter unique multi-cylinder per in the driven earnings ended Undepreciated up X% I last unit NOI by will growth touch housing and from over which on $XX.XX, years for

billion. billion XXXX, of businesses new sales repayments across and initial newly we we and had commercial from including billion with debt securitization billion $X.X $X.X $X $XX.X of $X.X $X.X proceeds completed corporate billion of fundings $X.X Against investments In follow-on lending, fundings billion. and of that, of billion, of issued

to with of continue have significant million will April cash of to X. repay on today, which billion our $X.X convertible We we maturing notes liquidity $XXX use

within which and our unencumbered gains benefit be liquidity. to We additional create assets can portfolio, excess of both also utilized from property

including I we will for and year which Residential of full Lending, million investment contributed Commercial loans, build-to-suit DE a $XXX $XXX lending, start which tenant. commercial originated to XX% million my segment that originations on discussion pre-leased brings was $XXX is to billion, quarter. and In our million this This industrial. an loan the industrial $X.X an grade morning multifamily of of with

is nearly At XX% quarter industrial aggregate is pre-COVID our and end, exposure level. multifamily which the Xx

exposure million a ago XXXX, In is our XX% Class to quarter year loan of and today. A pre-COVID. XX% repayments. end, reducing office Canary Wharf, we in our of just be loan to further which exposure $XX a down from London And continues subsequent $XXX million received XX% repaid office predominantly Our commercial office office early, book,

$XX.X our positively $XXX further million liabilities million a $XXX by increase loan brought and business XX% basis in offset XX% a loan million partially interest per share. of of in lines, year-over-year, point all repayment. to new loans by or $XX During record million the loan inclusive rising $X.XX our pre-existing and assets quarter, This with earnings increase up Company-wide were of commitments, billion, portfolio of XX funded $XX annual to we rate rates. floating base of correlated which rates would

our On general no Unlike more placing looking future and peers, front, to actual portfolio. type of loss, adequacy while over this CECL risk reserve model of we the our reserve, on or balance the a by in LTV, one X.X% more loss In as of increased the of is and $XX internal CECL historical the experience the performance experience. subjective on property focuses credit our key emphasis at our well million indicators quarter just million historical $XX lending as our ratings. of commercial

had To we end, new reserves specific that quarter. in no the

bringing million downgraded $XXX and $XXX the to a we $XX loans loans to million X in which However, will million. discuss won $XXX to X our office loans X-rated retail Jeff total and million X from totaling to quarter, loan from X a X X-rated a million

We in real fully the and assets these recoverable. believe are estate are confident underlying ultimately

foreclosed office in-place on which the million discuss asset will in Jeff loans the in related million. first more detail. building carryover basis totaling of $XXX financing on our a and recognized we loan X-rated the property L.A., quarter, $XXX we at The mortgage During have to was an

that including million In our billion. agency acquired Residential loans, sheet quarter, $X.X on-balance of to investor loans $XXX we discussed last of our we million portfolio $XXX business, bringing

recognized quarter, in we this slowed, our GAAP RMBS to million retained $XX have $XXX mark-to-market portfolio a the increase balance million. bringing prepayments As

have discussed in equity a We previously originator. interest our mortgage residential

an and this exited During GAAP the million $XX quarter, in loss. DE we resulting investment,

the our segment, Of of housing million from quarter. which will amount, $X came portfolio. to I our Florida $XX contributed affordable DE Property this million Next, discuss

a annually. this obtain The $XXX to recorded million appraisal in we was rental purposes, rate million $X.X are part independent implied we The bumps rent fair our value GAAP This portfolio. non-controlling For in interest. or contractual million as $XX net value valuation. annually. an determined X the is XX.X% the prior income X-year increase by October we In rents related of effective to unrealized the our for with cap quarter of year, higher portfolio will Lease in of this consistent which result an required increase of Master in recognized portfolio,

Servicing DE Next, Investing I million the and of $XX which will quarter. discuss contributed to segment, our

during X Our $X.X our during level conduit we our Starwood volume servicer, named Mortgage securitizations. Capital completed assignments the and billion, billion the total In bringing X assignments since $XX XX to year portfolio XXXX. across billion totaling totaling securitization highest the bringing new the totaling $XXX special quarter, to quarter $XX servicing $X in servicing X special the obtained our year million for billion

portfolio, the DE and portfolio million, as a transfers million, been quarter, recurring were demonstrating X million resulting $XXX servicing GAAP in into of billion once $X.X slightly million $XX the a cycles. active proceeds of declined again net to on of for Our asset resolutions of gain value sold this net $XX segment’s property servicing of $XXX And we $XX has offset this portfolio, and gain gains million. which of across embedded of consistent source a by

our floating my quarter. million of keeping DE sales $X.X segment million in which quarter, was $XX quarter $XX rate. $XXX million total of year contributed Lending at bringing totaled totaling and repayments for volume acquired the last million. which We segment, Concluding our Infrastructure million, with loans the discussion $XX to Funding XX% billion, of the $XX balance consistent business the the is to with portfolio

activity conclude will with I few markets comments morning our about this a capital capitalization. and

solely which financings We are our containing of continue focus on outstanding financing, and not spread non-mark-to-market to events. market non-recourse based marks, with XX% on

SOFR at ATM price During shares proceeds at average of share where X-year Loan at the full our ATM in or XXX. an common capital million $XXX to $XX is in quarter, stock shares issued of we sustainability B average addition plus price early the to $XX.XX, a quarter an of Term issuance of This raises issued $XX.XX. XXX,XXX million million we for $XX bringing X.X million year share gross our

debt the We credit under to our financing continue adjusted ending billion availability of across unencumbered and with an equity of undepreciated $X.X ample assets $X existing of our have lines, X.Xx. year billion ratio to businesses capacity

that, With over the to call I Jeff. turn will

We Higher always Rina. in years outperform earnings our normal created and higher but a Thanks, the built to perform dividend tail risk strategically one. have been markets, XX over on focus has business would last normal markets our leverage sustainability. in volatile in well and

with low more of on held value $X.X significantly harvestable diversified distress. through proven average, sides property our has $X since has gains model And at our sheet very sector. owned XXX% portfolio, trade balance the itself and in book below money we book with XX% of value. added has leverage, traded cycles stock makes yet line or have grown in our today, per we billion both of book On our that stock We of special servicer This in time share have lagged inception. our value, a

in year, this base the Given clearly focus credit. the rate significant market’s on credit specifically on and office rise is

the Rina previously again to office of exposure XX% is than but on Lending assets, the smallest since entire of balance sheet, of our we since have XX.X% lower loans of today. on million in this CRE and have that a of reserves them. current our loan fraction One reserve said, from percentage investment reduced segment reserves require far by a most to other COVID, environment XX% $X.X to disclosed have our Other in office balance of Chicago, the which CECL on office case lower we asset-specific lending the no only portfolio peers our and our expect would exposure retail loans make is our cylinders up we quarter.

markets property CECL XXx cumulative are With weaken potential CRE reserve, $X.X multiples only should our REIT the losses of cover from harvestable to billion cushion here. mortgage with we in gain model-driven over

We have able significant months be few to go to ensure re-underwritten maintain liquidity on run past our our markets stabilize. business in times to we offense the to as and portfolio both multiple

maturing capital next a after in in aren’t even on April unsecured in bond year the of dependent November. million maturing repayment raising a million the We $XXX bond and convertible cash $XXX incremental

also depend capital. to our earn ability dividend Our raising incremental doesn’t on

capital to investments we to the and As spreads raising on see rotating opportunities execute will by and and monitor have. today, will we sectors credit very to we our rates capital the normalize, opportunities optimize always investment for as existing continue markets accretive we continue

run investment term this billion, rate, In to we in stabilize, coming run stabilize once the of longer base. peaking multiyear resume and QX. posture expect our fraction maintain is we since have fourth to rate And defensive in begun we spreads our spreads months. $X.X Credit invested early credit the to quarter, a which expect

We inception, and have taken since in significant gains produced have matter proof assets REO that experience scale volatile into on we markets.

Capital the Starwood our on our We of enhancement manager, dedicated Group, XXX-person experience our this will again strategies execute to and team use liquidity year.

and any annually. reinvesting dividend drag gain, we doing to nonrecurring year have Without current pay loans non-accrual of core realizing earn greatest so past, as management’s and alone. or successfully quarter is that equity focus this REO in recurring share and over per earnings $X.XX any the into will benefit will reduction our increase businesses Resolving our our we new assets continue we in the by project each in

I newly want downgraded REO to position. and our spend minute a on

taken said, having to in Angeles quarter, Rina the an quarter. added in As Los downtown building vacant we during a REO office in the asset title

Houston the several of or redevelopment about We Galleria to asset to. interested an We with in area office of number spoke we are for property non-office a you, third keep through party in previously with scenarios have sale suited us the redevelop will use section are better and executed working and we we loan future a talked believe foreclosed at purchase we discussion for sell you and an on quarters. last our updated office to than a is use. basis Since on in a progress we residential conversion, with residential agreement parties

in XX own in the the Upper conversion condo Side called West our selling Chatsworth, we which the quarter, Finally, began terrifically. units shows we

pending end year. asset-specific rating exposure put we We X this Risk very this any under since reserves units can expectations, and downgraded to that contract have subjective ratings expect take maturities, pricing in and due our loans be fully not collectible. as to them quarter at X be shrink we X line we quarter to office a but cautiously believe did to with

in The D.C.; Washington, County and are Orange assets Brooklyn; Houston.

in investment funding in and in originator, Banks residential financing mortgage of and to received in resi have to Brooklyn the begin candidate discussions new expect to this are control unsecuritized with with bids are marketed above year. for stabilize we basis And expect are All collateral. we stopped each. competitive securitization can’t and preferred basis. may secure at January. that, conversion, the buying significant loans, find them all In real basis a terms these great assets estate equity a Against to very are our saw excess the and if them asset. assets in at unwilling having fund-related investors, County being support institutional feel D.C. our to our is their due become exited we normalize we we materially and lending, financing in sponsor them facilities we We Houston, at third we reasons at solution spreads residential cases, loans. coming best X working months. and is already borrowers of better on the loan the loan they to be the have close our get large Orange on they receive or should we sponsor or small In parties

performed Rina helping speeds portfolio. offset loan on prepayment to book slowed as have As below-target said, our securities has returns well unsecuritized our

energy add on in portfolio heavily attractive would we QX in offense, segment. We QX I continue to expect to lending infrastructure in above-trend our this invest go we more back returns. and When will lending risk-adjusted at

special about have the earnings of times power servicer we of distress. in our Finally, talked

earnings XX-year $XXX post-GFC said, start to years if XXXX up we X produce X.X in are year And $XX CMBS, now from loans. servicer for anniversary Maturities Rina continue volatile, just and our ago. beyond. CMBS the we this today, past going will could company on As of named special picking significant worth forward, billion be markets of or billion as and up this

turn will call I that, Barry. the With to

Fed increase the being in OCC rates, coupled conditions. Thank and telling who me to been the you, in I’ve to with trying raising TV, usually country, good tight sheets, the to of increase and you us. the and thank of Rina balance seen of let for with get everyone. incredibly what those rates start you, the have our largest reduction, Zach. in morning, I has Thank stop aggressively sheet impact the you, to back Jeff created the fastest with balance of and fairly the call. the economy Welcome and earnings on their they have history shrink done, cut most rates with banks lending the coupled Thanks

budget. two billion about between infrastructure which if government their will you get will tug job act developers the XX%, financial losses to of is single-family construction And And you construction, this war go And expect in and look fallen of U.S. I be back together complete that’s has wave at off and Obviously, have commercial and private a at we saw that construction. look construction. manufacturing job gets ending where I the $X the were is report manufacturing. really negative, cliff. in when dropped of to in to spend a losses many would were morning the get homes a crisis we great this projects commercial for it their manufacturing, projects whatever tabled. categories: When they Construction some

So which knocking be the where reasons that harder, I is real across wages jobs destroying real service can without going the wonder actually a Fed little one of and to off is jobs effective, the economy. be

During ‘XX, ‘XX, went up. education healthcare ‘XX, and actually

interest you So with that rates. can’t change

last airlines travel, such. XXX,XXX service be first go really the hurt So you place All unemployment and that but the economies has which from already happened been as show which X come let and never before, retail, see between white-collar and dichotomy these claims months but the off. would sector services benefits, Business the unemployment are actually you’ll long when numbers that of benefits, layoffs. tech unemployment recession. people see the in job and could the companies largest these And only things up people, as getting a this it’s

I yet numbers retail from retailers think and prints. grown the you’re economy, see Target from the seeing you and these

X. restock obviously, number because that you’re wants people getting for a of up I actually everybody when think January because, in of are inflation, that X was to summer. up And it’s X, the inventories prices because down clearing retail forget

growth, unit the fall you’re And not the volume price a than eventually, see So let you’ll up. but you’re nominal will increases, getting further unit and getting those volume.

XX% finish need building things you’re of expect the lag. the But expect the the will other chain the will chain chain China on there. the of now, fixed inflationary. right don’t because time dishwasher think of The in these the on it supply go States. supply I will actually the still numbers in rising. delay said, into late not we’re to about one choose a the And the Fed were just and I don’t it’s It’s complex. is white. the supply If when with in to I help done CPI. do of on now to you building need And to rent could head of waiting categories they components as inflation, it are other fixed, thing you And negative that when single we it’s rents so reopening great. category a is reason building the – super definitely that’s think, and actually XX% they wasn’t XX% their world the eventually, south, them XXX% – which get falling, fact. can’t that black fall was – I’ve reporting. are why I given depend be data having for raising to rents, and It you and budget. inflation the be it CPI get the United up and know said all And Basically, government to I rents a such

increases, that goes really to argue it’s If that’s deflationary. that the of will it fall. call way. but comes And that supply could in necessarily and you and I wouldn’t inflationary, itself structure down, demand the company, the I prices in up why set So actually,

for is of bit Let’s talk estate about a second. landscape minefield. a the real It a

You is today tell fantastic. or companies in can’t have what’s because which these in really debt, floating of us looking many private public at going on companies exactly rate

are going up earnings debt. Our rate with floating

Our us industry time the or as borrowers, class this. and whom the and bank an And have, in what’s you’ll and loans I’ll key insurance the course, of happened of pay banks, and maturity. the is most place loan also, include in they loans the have those and companies until rents asset made see made the to we can we caps the

And then, and course, where the could where that are. what refinance of they spreads can are and rates

on I a new of that in make position the up of companies construction to the It’s plus empty back made hotel kids’ loan are we XXXX. So is loan day, the in driver XXXX probably seen put cost. Many do had own and right I costs. an at Trust when a now. a SOFR not wish $X.XX capital Washington new for never mean and that in loans, we the as good general, was a to – XX% loans. as Property at a me opportunity million driving XX% started truck, in pool it was I not they of Construction construction this I to trust end We’ve had was today. Starwood a a blind this. way, love out in up the like $XXX site that I’d other XXX, near in hotel and I that told spreads at loan were we

picking defense where to and choosing We’re mostly the capital. deploy and paying

it’s expect rolling off basis But once comes they to in go as offense. still we I be they happen because done fall some says pushed to the XXX done. saw strength I And that report of we Fed recession yesterday place, and the what quarter will back rates we economy, Fed the expect rates. a probably a are the soon two in there is or been forcing fourth points, remnants quarter. And into basically but probably it clear lower see landscape to the we as as a can’t to on wait

only and book So bigger which let’s gone. financing is a loans little a second. firm classes going you will is get rates be A to already not financing million ability for and up, because until become through focus halted talk a of to is about of And our housing cap shortage. construction our go X.X your up multifamily lending have the bigger asset has the multifamily, a way

buildings are we have since long-term, they to me and in rents you’re loan – – alone up than started portfolio tells rents going the making book, rents our Jeff it’s loans. but short more increased headline going down, in-place are because gap the rents see are So these going those on XX% our actually in

that will So we think, quickly. stabilized they hit yields, their fairly

rates ChatGPT if because the going residential delighted be and we is excellent. interest values costs back issue Long-term, sector. billion because the for much multis are buy are supply single-family capital class rate but and the sad, homes And would $XXX that to to going take is delighted up, multi going supported attractive. And it be I home rental cost of single-family solid game the And multis. more makes is of housing as down, single-digit long of over There rock. going a attack home the by is no will construction the owning up, asset

rate available cost total People understand or as is things underwrite of debt going a help supported safe than asset they they floating that the Multifamily haven other over XXX is at or get So and it asset rate Fannie today really to will that class. XXX actually can’t in lower classes by cost multifamily can’t to or course, funds today. pretty spreads Fixed XXX fixed are to like Freddie is the over. cheap where and sector, of away loans for. run from issues are and

So about the Journal, in net each charging of even B course, it, at the stuff. to or moment. It’s a the we months it’s high supply worth coming you’re softness compete will if a It’s get class X the up money will but of will some against shortage have other the doubt because than evident. no and after a place which been A make A to class, market We supply. into fight trying or in family, are Street up assets the fortune talked park away, the Wall the invest runway writing the interesting if has probably fortune you want an and – of longer class ease of They to we through. about,

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an XX-year and so you bond has is supported lease, And convexity if have Amazon you not don’t have negative a on steps, agency. debt by industrial government your the

pressure but it’s and of any cap rate most perspective, at So under asset more from moment. a the class income strongest growth having the the solid

that office how wonder a strain. the has United markets, two worlds, The that inevitably been but and which some do if you of slows States. which and should pricing is down, everything You under have States – tale United the

Germany. some investments in United we in have the – Berlin are I are Europe, offices than Munich, Munich, X%; vacancy rate in leasing, less particularly in up; XX%. Rents but just Everywhere The is it’s that. States in

tale East, Japan, which U.S. of by a have has office. people in tech back U.S. If this in office. the you unusual phenomenon is gone the U.S., you have at Middle two Australia, probably cities. look created led to Asia, It the a sector And the situation Korea,

leasing newer emptying. else and, You switch. have and A, almost And everything a buildings buildings it’s one-for-one

sector, doing A the okay. you’re you are if in So

with lease Group the start were in a is lease. Capital market we a renewing worst United probably States office in the just probably You

much in paying today We to there will the back And vacant but we’re other have time, know they credulous. in don’t I is or to very a like mean we the best office lowering XX% stock good They’ll become be XX parks. uses. them, there from these high-quality for be indoor a buildings, big and the waste I to will silos – their can’t rents, it. what quality pay buildings are green they San It’s unless converted Francisco, I demand And for to not way. in really from choose market, than in I was will no in have assets. people cities demand and be buildings A to more more believe other at go all lands happen assets. removed to is over

being working in generation the like from younger but of personally from Montauk. don’t Hole I actually likes home, I and the like office. Jackson working most

recession. fire in I for in to It that offices. people are people going been So that’s think has easier their to a not change

see don’t them. obviously You

attached not You’re banner they place them, and great work. and exactly aren’t to making it company for raising the a the to

And we almost will So overall a our I no be exposure to office I mentioned, triable San which of as and toughest Francisco state; do continue markets. the that performed out of It’s that’s commercial only know, you toughest. are pretty asset mortgage over Having switch portfolio, their not Texas; have said of hold REIT that, today. ago. in lowest only of the think markets occupancies little markets might XX% think has book, the made XX%, change. fewer a we Jeff well. there Tennessee there that And which any long the been And Austins, subletting. to for the better, red interestingly, states, two have the And Nashvilles, is York New that the those or speak research part not a to as the Florida

continue space, some is they these cities. positive net absorption and attract to in there And

have unions as no you’d obviously, will to trade to the there is city Hotels been and strong. where by there is people still city out And continue office incredibly is are markets. work. states blue migration taxes, no of right states red going the and expect, the that income of you’re there the So a for

but hotel the of industry your things hotel for you its you of to the attention almost you’re XX% his rooms, is know missing paying One all much don’t workers how pay is so used there, margins higher, rates your the service XXXX, was. as but it not have probably aren’t And to is good. really that as good the the in workers are it are

should You to you. to today them because we’re a not going sheets for own hotel your change bring

would XXX,XXX is we strong. But well. wants major jobs obviously in a in be bought which loans January, than half industry lend hotels years. more has I’m back in Starwood against Group change know jobs of way hiring more really they long hospitality markets those people may the class or Nobody into that – That couldn’t to to mess. asset Capital which the to we sure centers hire. vacuum. delighted be to It’s are continue added made XX that And the hotels, the debt away went the are There were step industry. an anyone in Data groups. hospitality not last a very the the

We have have you credit watch. issues to

XX.X. of the the is much that the issue this We’ve banks I about last X still environment since low this of Xx the – is or years probably XX but lending today And we’ve Like during sidelines, competition or are is grown not insurance the or the best void, and we that too seen Lease – companies up filling are existence. because our XXXX. think lenders, are at yet key XX on moaned an actually the leverage. playing

extremely in well markets, and from base, we capital we feel our our real-time incredible spread data our knowledge this market. asset and the Given background credit, could of deploy $XXX billion

we make the we’re risk we the navigate our at equity in. we anything that moment, issued if itself this extraordinary were through defense have as value, to not liquidity credible play today with characteristics. And world always we’ve book unusual way to handle that finds situation value. love, can sure the comes below But and going we we we make But think above loans a book reward

is And doing shocking, multiple and virtually floating we’re earn here probably scenarios, primarily phenomenal at we which to nothing, it’s our is What we do But is have can is surprising really we we’re the least. doing earnings carrying book which because me into rate and nothing. dividend the almost running nothing, We got thing doesn’t they the getting actually the not always a repaid the paid cash firm downtime, earning loans. and is we currently. and and get don’t good coupon money have because the go repaid

sell XX. earning, we’re the redeploy not X deployed might I to base can The turning whatever at a look X keep, in over or would maybe their small on do is we focus asset that are other how loss on at we XX, doing faster capital earning say, thing be we’re that the and take things to the situation get be

The the our if additional could them. we out, in or in of tie capital equity – from unproductive they Last in get up Tower our can to. whether Angeles really They the Los course, or is buildings liquid the of interest thing, that. Jeff wanted it’s us. in apartment, Houston do mentioned, contributing anything. Their not to source of we assets the multifamily course, book are sell We’ve Chatsworth we as by to selling And create for the, additional wanted assets not Woodstar portfolio, liquidity additional the

for of liquidity on billion on sit of create the lots liquidity we We ways have $X.X today. to of the firm top

we’re So about excited I think the opportunities.

going knowledge unparalleled else We’re against hedge in the cautious environment. have databases IT a that XX largest firm, will that markets is everything They the the of of inside continue We something loan hell the perform a like servicer, people who something both and to service the in LNR run power book. It’s are in the the about country the employ a nice have on business. and to CMBS special world. in the they

We it’s of employees that the head years accumulated have an XX servicing one and company. he’s do original of XX Actually, over been been is our here job. of and years. They amazing the information mind-boggling, has

to be what it life peak we in company amazing the that. of we And earnings foreseeable earned will future. something be learned. opportunity the the they’ll The for additional and to ‘XX, better the today, in And I think, more it I ‘XX, third roughly, are and think like in grow will the gets, worse their him an add

upside, good is any pure So we that there is the firm a deploy doesn’t not capital, things. for hopefully, ROE of business. will see It and the positive hopefully, business, which ROE raises is –

too want probably So too bad to good. good that if loan it’s for we don’t book obviously get because the it’s

the market, it done. of think to markets first capital thing take It is are think equity we’re is runs should fear Fed is the for bit the XXX-plus there themselves. way. ahead the they And over do in. market. out what That anomaly. AAA signal that from I not happens that is spreads I think advantage positioned that to So tons equity and we’re is I a in come an looking are the there, the of be

Beyond sure on inflation. the want do normalizing. can future and of themselves I’m how were Bath and the driven up actually see I thought be be we I settle know couldn’t the like dead. of analysis with that to try number & a the really to inflation show potential AMC can just stocks X%. capital in and is on We the You to fundamentals not Bed would guys a to the don’t could speculation to economy they visitor could equity that that. and of happen. I you’re and these get Immune X% creep try rated back not lords debt really he down then the these and make again, companies the get and all balance we growth X% hold get and think cost to do by that markets sure to even crush that am can I going fundamental not healthy. back actually the

power own be do and something lord think we’re team to because virtually I him his their the actually that is going So need to impossible. better

worked not to sheet We debt, past outside hard on balance decade today, over fortress sheet great CLOs great balance have debt. the repo our a We’ve and balance our a sheet.

could what So really sit in do excellent to we’ve done prosper the we into to pretty position future. much a

base, a and great team, shareholder committed. great Everyone’s deck. thank a Board on you. a got hands all great and We’ve We’re

We will questions. take

of the Our proceed Credit your [Operator you. comes Thank line Instructions] Suisse. from question. Doug question Please with Harter with first

– interested to your sell of Thanks. lending opportunities? Woodstar that for in comments – additional I’m raise is just talked being opportunity touch willingness of a you hoping funds given appetite not could sort kind about guess Woodstar. to lending down or a this you on I But your down curious, selling or capital for

could about mean, We different were yesterday a talking situation. it. it actually, Yes. I do you in

of have clients liquidity, first. two to want It took the account but to to it don’t come interest been need a we we’d – housing. us separate a to the hasn’t affordable One go deploy. has of institutions to for to course, that And our excess ton love buy of we

source prices capital are move probably gold. redeploy and think like Woodstar assets value. And would housing that realizing I to number taking go But rents first. my on be with the one about We the consistent right in just forget, there the where are are. we’d our is selling condos other and can’t Don’t book marks Chatsworth forgetting around like affordable down.

affordable. none all of it’s – So and this building,

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which It in dollars that about wage is then out trillions So, growth. killing have consumers isn’t else chain we dislocations of It came want killing of supply wage commodity and from spending about really the they throwing to because inflation, do. went growth. nothing price and

a we tried a So, buy we it, everything know they sat couch, buy. a could try buy to tried We to chair, buy home, they desk. all to all bought we

get everything anything. cart, golf they couldn’t have bag, a buy you a golf to went now Watches, cars, want and in sink used You reversed.

just we have be careful. to think I So,

retirement our We consistent a us They count growing and and flow have letters chosen great very and shareholders help safety, us their from really amount a accounts provides support dividend. complementing the cash on Woodstar our I to get to stream dividend. us in of on dividend.

doesn’t it a come course, up. like cost of sale. book up actually the not So, the we without went with And because marked it

little I a probably substantial. I on have it again. up could would the The increases, were sell We took which and gain gain, realized third-party it appraisal NOI based think,

all it’s So, [ph]. gain

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Great. Thanks.

you. Thank

comes Please James. with from Raymond question. line proceed question the Stephen Our next with Laws your of

on come a or remarks? I Florida, you increases but mentioned I touched and been was as that about believe states in a in Hi. numbers CPI, the sure mentioned little of on Good that – follow-up and rent might the roll can May about prepared really strength morning. this think But increases. when trailing about about am think forward. you when the red talk Kind I you the Woodstar out? if AMI that bit, we see Rina, forward not look have in to guys should we your you drives through. as continue given those it year that how think do last And you

for Yes. Thanks out question. will April. in Stephen. They again Hey the come

have look income. next a of CPI they maybe couple We look know X-year good. will usual, the on the for As and those really on years inputs

to but going years, continue April. data feel we really come we comfortable increases, few the rent see next the new for So, that in to are actually will

they We their number exceed unbelievable. would actually XX%, if this. the can changed which is the north be notice, calculating XX%, government number And expect to of as that

will will get be that’s in strongest affordable office sector the multifamily that driven. So,

I local be think could income higher on the coming depending portion it that’s from the growth.

keeps a it So, said, it’s on gives I giving. like

I think bit wrong X-rated, expect So, pay-off update I more quick give But have together? it little One you can follow-up, us like the how it’s me early detail you there. know if about you and but D.C. maturity resolution a and am that on conversations market or little I the there. you looks the QX. correct a in office talk a could Jeff, strong guys, asset, Washington,

Yes.

there. was touched not I other spoke that about the which is that we one earlier, there asset So,

deck there XXXX one see So, our that’s that a is you in maturity.

think that that’s late get asset. a XXX,XXX news is residential is There pay-down. a We and that leaving, office we to ‘XX for extend was completely early are The vacant it’s sponsor I right asset candidate ‘XX, into it’s really working today and X-rated asset spoke the that And did tenant, How that feet a now a asset. another conversion. with GSA downtown with is it’s if GSA good square about question. tenant your that loan, potentially good

we haven’t GSA to back, this still yet. in We of and be But there some we the discussions our we a asset at are already asset resi, The significant basis do lot tenants. take taken will if we they convert think have touring it out that. potential interest is sponsor to and back strike – exactly to

is of One buildings sometimes out emptying these for things difficult the resi.

the have floor right have obviously to You plan.

You have to – have the right center core.

have right You have to the plate. floor size,

this when Houston to desirable checks think market have resi one And that an pulls our better in office with resi that are and these is asset can the happen area play. what for a prime that’s boxes. back a sort the two be we office all resi of conversion You of working we along on of those space examples are really

forward are there tenant better that that if they year. the GSA we this on So, before clip is one a optimistic move don’t maturity to a play

Great. Appreciate Thank there you. the color Jeff.

you. Thank

line your Our question the with from next Jade question. Please Rahmani KBW. of comes with proceed

very you Thank much.

about you the and and each also can of are credit worried terms understand in estate to real hoping environment on trying portfolio how or the nervous the Just overall, Starwood on outlook commercial separately? you comment

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to I XXX. is to building really sector, hand shocking almost see equity was it today, a office is. which think back SOFR that to in actually. on in an lender, of of XX% the us. are household It what this the name third us going Loans institution, are XXX back building to a To You But it depends the probably D.C. case tricky. in had institution the building is is kind give a plus XXX,

Maybe you can a be you see cash to cash a wider you if have loan. going flowing over, which have flowing don’t hotel, close you XXX significantly are hotel, But a going it’s that. think to – get it’s to you turnaround, than is X.X% but X%. If can

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see will it out. We plays how

spoke Virginia, for the about about was me, Page Hey back anything, I probably That bucket largest X-rated when on short guys lease I asset that about conversion of think this average you in that were because excuse in on for don’t to I question that the a want the will that’s is a That’s Jade, be us. leased, there exposure, or realizing the asset, life a Page were pay potentially a office think good I tremendously weighted term, is I seeing now second shape. we anyone pay-down million to to largest in And XX which want loan, well extension. am what but think Carolina leased you about. very loan XX% ones loan resi. jump but off Stephen’s up, the But is risk think I are talking a to talking really in a material The rated strong $XXX year. of that asset, I and I talked XX, too our will October first North again, what where XX-year and

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you. Thank

Don with proceed question. Our comes of Please next line question Fandetti your from Fargo. with the Wells

event you bit Can what, know playing is owning a scenarios? Fed the you this temporary, this about to cut those willingness of outside saying, a of or about two are asset will think we little just and we that expires because you other the hardball sort balancing their with you mind Like wouldn’t is how office. how thinking of rate Hi. are borrower work kind as cap talk a whatever versus

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lenders add to to senior to of business. important Barry, that? tremendously are the success Our the anything

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Thanks. Okay.

comes Shane [Operator JPMorgan. from line Please your proceed the question Instructions] Our with question. of next with Rick

Hey. This is Shane. A.J. on for Rick

reserve the that today. see were a general no shift see those build those just XXst are we would to would I included work on already First, is in know just specific there your kind and loans from But loans assets we specifics? downgraded, that or of reserves additional if out, any on of reserves, don’t December

So, they A.J., reserve general currently. part, are of the

probably So, it would be two-fold.

a So, it the have a general to a reserve transfer reserve be there point. in specific would if further deterioration would that and was asset, you from increased at

then Thank you what us reasons the downgrades. office helpful. Okay, great. for mean can I you fund-related want That’s reasons is sponsor sponsors you. with support assets? And were the there to there going said to anything share are the

a a case, in. And real few a in that they is commercial fully in more there money are cases. fund fund estate, and not It’s invested is leaving a large putting

of the So, the the they think available you in in support project. have are people seeing today cash one. a the assets have owned to it’s where either lot to the specific that are a scenarios different don’t to. be continue trend unwilling I able each where similar cash more to available in These But don’t funds are or

accretive the So, those continue. able do are where opportunities if be have to where more we we capital tend us to to to be in, do step

Great. you. Thank

comments. and I Ladies to you our will session. Sternlicht, concludes Mr. question-and-answer any the back for floor final gentlemen, turn this you. Thank

the operator. to you, everyone. team you for be your your transparent obviously available. are Thanks questions Thank welcome is we and and questions Thank and here

great a warm. have Stay and you quarter. Bye. first thank So,

Thank conference. concludes today’s you. This

your your you for You Thank this participation. disconnect may at time. lines