Latest news with #STWD
Yahoo
26-06-2025
- Business
- Yahoo
Annaly vs. Starwood: Which Mortgage REIT Offers More Resilience Now?
Both Annaly Capital Management NLY and Starwood Property Trust, Inc. STWD are mortgage real estate investment trusts (mREITs) that invest in mortgage-backed and other real estate-related securities. Both REITs are exposed to the same macroeconomic risks but differ in their portfolio strategies and risk profiles. But which one offers the better opportunity for investors right now? Let us break down the strengths, risks and growth potential of NLY and STWD. NLY's investment strategy is driven by the prudent selection of assets and effective capital allocation to achieve stable returns. The strategy includes traditional Agency MBSs, which provide downside protection, and investments in more non-agency and credit-focused asset classes that enhance returns. A scaled mortgage servicing rights (MSR) platform will continue to benefit from a low prepayment environment. The company is focusing on improving its capabilities by acquiring newly originated MSRs from its partner network, which will continue to provide a strong advantage in expanding its MSR business. As of March 31, 2025, its investment portfolio aggregated $84.9 billion. As mortgage rates are witnessing a declining trend lately, purchase originations and refinancing activities are improving. Hence, NLY will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should boost net interest spread, improving the portfolio's overall yield. This is expected to support the company's financials in the upcoming period. Annaly is focused on improving its liquidity and reducing leverage to support capital distribution activities. By the end of the first quarter of 2025, the company had $7.5 billion in total assets available for financing, including cash and unencumbered Agency mortgage-backed securities (MBS) of $4.7 billion, which can readily provide liquidity in times of adverse market conditions. NLY has a record of paying out monthly dividends, currently yielding a staggering 14.6%. It presently sits at a payout ratio of 101%. In March, the company announced a cash dividend of 70 cents per share, marking a 7.7% hike from the prior payout. This move reflects confidence in its cash flow and growth prospects. STWD's investment strategy includes investment in commercial mortgage-backed securities (CMBS) and related commercial real estate assets, with a diversified portfolio of $1.02 billion as of March 31, 2025. This allows it to generate stable income streams while capitalizing on market opportunities. The company's asset management expertise and ability to navigate the complexities of the CMBS market contribute to its strong market position and growth potential. Starwood has been engaged in acquisitions and divestitures to optimize its portfolio. In February 2024, the company sold 16 retail properties in its Master Lease Portfolio for $387.1 million, recognizing a gain of $92 million. Additionally, it sold an operating property within its Real Estate Investment and Services Equity Portfolio for $18.2 million, with a gain of $8.3 million, reflecting continued portfolio optimization. The company also sold residential units in a New York conversion project, totaling $12.1 million in proceeds, though with no gain or loss recognized. Meanwhile, there were no significant acquisitions recently, aside from properties acquired through loan foreclosure. This strategy of selective sales and reinvestments supports the company's ongoing focus on enhancing its portfolio. However, Starwood Property's weak liquidity position is concerning. As of March 31, 2025, the company had cash and cash equivalents of $692 million. Its long-term debt was $18.4 billion. This can be concerning if the macroeconomic situation worsens. The company pays out a quarterly dividend of 48 cents currently. It has a dividend yield of 9.5% with a payout ratio of 108%. Over the last five years, STWD did not increase its dividend. Over the past year, shares of Starwood and Annaly have risen 13.7% and 11.8%, respectively, compared with the industry's growth of 5.2%. Price Performance Image Source: Zacks Investment Research In terms of valuation, STWD is currently trading at a 12-month forward price-to-earnings (P/E) of 10.87X, higher than its five-year median of 10.58X. Alternatively, the NLY stock is currently trading at a 12-month forward P/E of 6.65X, which is lower than its five-year median of 7.27X. Price-to-Earnings F12M Image Source: Zacks Investment Research NLY is trading at a discount compared with the industry average of 7.96X, while STWD is trading at a premium. Hence, Annaly is a better choice for value investors. The Zacks Consensus Estimate for NLY's 2025 and 2026 earnings reflects a year-over-year rise of 6.3% and 1.4%, respectively. The Zacks Consensus Estimate for Annaly's 2025 and 2026 earnings has been revised upward over the past 60 days, suggesting a bullish outlook from analysts. NLY Estimates Revision Trend Image Source: Zacks Investment Research The Zacks Consensus Estimate for STWD's 2025 earnings suggests a year-over-year decline of 10.9%, while that for 2026 indicates a rise of 7.8%. The Zacks Consensus Estimate for STWD's 2025 and 2026 earnings has been revised downward over the past 60 days, suggesting a more cautious outlook from analysts. STWD Estimates Revision Trend Image Source: Zacks Investment Research While both Annaly and Starwood offer attractive dividend yields and operate in the same broader mREIT sector, NLY stands out as the more resilient and better-valued option for now. Its focus on lower-risk Agency MBS, a growing mortgage servicing rights platform, improved liquidity and positive earnings momentum provide a stronger foundation for long-term growth. In contrast, STWD's heavier exposure to commercial real estate, higher debt levels and downward earnings revisions make it a riskier choice for now. For investors looking for stable income with lower risk, Annaly offers the more compelling opportunity right now. At present, Annaly carries a Zacks Rank #3 (Hold), while Starwood carries a Zacks Rank of 4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
24-06-2025
- Business
- Yahoo
STWD Q1 Deep Dive: Loan Growth and Asset Resolutions Amid Changing Market Conditions
Commercial real estate lender Starwood Property Trust (NYSE:STWD) reported Q1 CY2025 results beating Wall Street's revenue expectations , but sales fell by 16.9% year on year to $170.3 million. Its non-GAAP profit of $0.45 per share was in line with analysts' consensus estimates. Is now the time to buy STWD? Find out in our full research report (it's free). Revenue: $170.3 million vs analyst estimates of $134.7 million (16.9% year-on-year decline, 26.4% beat) Adjusted EPS: $0.45 vs analyst estimates of $0.45 (in line) Market Capitalization: $6.87 billion Starwood Property Trust's first quarter results were marked by a significant year-over-year decline in revenue, yet the company exceeded market expectations on the top line and reported non-GAAP earnings per share in line with analyst forecasts. Management attributed the quarter's performance to a surge in new investment activity—particularly in commercial and infrastructure lending—alongside progress in resolving non-performing loans. CFO Rina Paniry highlighted that loan originations and asset resolutions occurred late in the quarter, so their full earnings impact will be realized in future periods. CEO Barry Sternlicht described the company's position as 'through the worst of it,' emphasizing the resilience of Starwood's balance sheet and the recovery in transaction volumes across its lending segments. Looking ahead, management sees opportunities for continued balance sheet growth, supported by what they describe as one of the strongest origination environments in recent years and a robust pipeline in both the U.S. and Europe. President Jeff DiModica stated, 'The opportunity set should be large,' referencing favorable capital markets access and declining competition from banks. The company also expects ongoing resolutions of non-performing loans to unlock capital for reinvestment, while Sternlicht noted that lower interest rates—should they materialize—could accelerate asset recoveries and support earnings. Management remains cautious about macroeconomic headwinds and the timing of loan closings, but is focused on disciplined growth and maintaining liquidity. Management pointed to a combination of strong loan origination, active asset management, and shifts in capital markets as key drivers in the quarter. Late-quarter activity delayed recognition of new income, setting up future periods for potential improvement. Loan origination rebound: The company experienced its highest level of new investments in nearly three years, with $2.3 billion committed in the quarter. Infrastructure lending saw record capital deployment since the GE acquisition in 2018. Many originations occurred late in the quarter, so their income contribution will be realized in subsequent periods. Non-performing loan resolutions: Management resolved $230 million across three assets at or above carrying value, including a nonaccrual hospitality loan and two foreclosed properties. These actions reduced reserves and are expected to support future earnings as capital is recycled into new investments. Affordable housing portfolio growth: Rent increases in the Florida affordable multifamily portfolio were set 8.4% higher year-over-year, though some increments are deferred due to regulatory caps. CEO Barry Sternlicht characterized this segment as a 'hidden source of value' due to consistent occupancy and potential for future rent growth as regulatory restrictions expire. Shift in lending focus: The company is emphasizing data centers, European multifamily, and U.S. multifamily loans, with 70% of Q1 originations in data centers leased to investment-grade tenants. Management highlighted the strategic importance of diversifying both geographically and by asset type. Capital structure and liquidity: Starwood completed $500 million in sustainability note issuance and extended its average corporate debt maturity. Management stressed the company's 'fortress balance sheet,' with $1.5 billion in current liquidity and significant unencumbered assets available to support future lending and operational flexibility. Starwood's outlook centers on leveraging its capital position, asset resolution activity, and exposure to targeted lending segments amid a shifting economic environment. Active asset recycling: Management expects the pace of non-performing loan resolutions to accelerate, freeing up reserves and capital for redeployment into new originations. Sternlicht said, 'At some point, we're going to be able to harvest that capital and put it back to work.' Origination pipeline strength: The company anticipates continued elevated lending activity in data centers, European and U.S. multifamily, and infrastructure segments. DiModica noted that a robust pipeline and limited competition from banks position Starwood to grow its balance sheet, though loan closing timing may impact near-term earnings. Market and macro risks: Management acknowledged uncertainty around economic growth, interest rates, and regulatory changes. Sternlicht cautioned that while the company is well positioned, 'The road is not paved with gold. There are bumps.' The company is closely monitoring supply-demand dynamics in key property sectors and remains disciplined about growth and risk management. In future quarters, our team will be watching (1) the pace and success of non-performing asset resolutions and the resulting capital redeployment, (2) progress in growing the commercial and infrastructure loan portfolios, especially in data centers and multifamily segments, and (3) the impact of macroeconomic shifts—such as interest rate changes—on origination activity and asset performance. Execution on these priorities will be key to Starwood's earnings trajectory. Starwood Property Trust currently trades at $20.24, up from $19.05 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
Starwood Property Q1 Earnings Miss Estimates, Revenues Decline Y/Y
Starwood Property Trust, Inc. STWD reported first-quarter 2025 adjusted distributable earnings of 45 cents per share, which missed the Zacks Consensus Estimate of 46 cents. Further, the reported figure compares unfavorably with 59 cents per share in the year-ago were affected by a year-over-year decline in revenues and book value per share (BVPS). However, an increase in the cash balance and a decrease in expenses were positive. STWD's first-quarter 2025 net income (GAAP basis) was $112.3 million, which fell 27.2% year over year. STWD's total revenues were $418.2 million, down 20.1% year over costs and expenses were $384.2 million, down 24.6% from the prior-year quarter. The decline was primarily due to a fall in interest expense, management fees and other Property's BVPS (GAAP basis) was $18.87 as of March 31, 2025, down 4.9% from $19.85 in the prior-year company recorded fundings of $2 billion, which increased from $564 million in the prior-year quarter. As of March 31, 2025, cash and cash equivalents were $440.6 million, up 16.6% from the prior held for sale totaled $2.4 billion compared with $2.5 billion in the prior quarter. Starwood Property's focus on commercial mortgage-backed securities and commercial real estate debt investments continues to generate stable income. Its active engagement in the acquisition and divestiture of properties will enhance its portfolio, optimizing its asset base and helping it adapt to changing market conditions. However, the year-over-year decline in revenues and BVPS remains a concern. STARWOOD PROPERTY TRUST, INC. price-consensus-eps-surprise-chart | STARWOOD PROPERTY TRUST, INC. Quote STWD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Annaly Capital Management, Inc. NLY reported first-quarter 2025 adjusted earnings available for distribution (EAD) per average share of 72 cents, which beat the Zacks Consensus Estimate of 71 cents. The figure increased from 64 cents in the year-ago quarter. NLY's average yield on interest-earning assets improved in the reported quarter. However, the company recorded a year-over-year decline in BVPS. (Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.)AGNC Investment Corp.'s AGNC first-quarter 2025 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization benefit) of 44 cents topped the Zacks Consensus Estimate of 41 cents. The bottom line declined from 58 cents in the year-ago net interest and dollar roll income of $477 million moved down 3.8% from the year-ago quarter. AGNC reported a first-quarter comprehensive income per common share of 12 cents compared with 48 cents in the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
10-05-2025
- Business
- Business Insider
Starwood Property files automatic mixed securities shelf
17:03 EDT Starwood Property (STWD) files automatic mixed securities shelf Protect Your Portfolio Against Market Uncertainty Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>>
