Executive Summary

Q2 2025 delivered GAAP EPS of $0.38 and Distributable EPS (DE) of $0.43; DE beat S&P Global consensus ($0.382) on stronger deployment and diversified earnings streams, while GAAP reflected realized/non-cash items . Primary EPS beat vs. Street underscores resilience as originations surged and credit metrics stabilized . Values marked with * are from S&P Global.
Capital deployment accelerated: $3.2B invested in the quarter ($1.9B commercial lending, $0.7B infrastructure), and $5.5B in 1H25, already surpassing full-year 2024 deployment; liquidity and funding access remained robust with term loans repriced at sector-best spreads (SOFR+200 and +175) .
Strategic expansion: closed the ~$2.2B acquisition of Fundamental Income Properties (467 net lease assets, 17-year WA lease term, 2.2% annual escalators), expected to be accretive to DE as the platform scales; funded via assumed debt ($1.3B), a ~$500M equity raise, and cash .
Balance sheet and platform strength: $5.0B unencumbered assets, >$1.4B unrealized property gains, no near-term corporate debt maturities; LNR’s top-tier special servicer ratings reaffirmed; dividend of $0.48 declared for Q3, extending the never-cut dividend record .

What Went Well and What Went Wrong

What Went Well

Record-like investment pace and diversified engines: $3.2B deployed in Q2 (1H25: $5.5B), with growth across commercial and infrastructure lending, and the addition of a net lease platform expected to add stable, recurring cash flows .
Funding cost optimization and liquidity: repriced $1.6B of term loans at SOFR+200/+175 “at par,” with ample unencumbered assets and no near-term maturities; management highlighted best-in-class market access and rating agency affirmation .
Special servicing leadership and counter-cyclical earnings: LNR’s highest ratings (CSS1/CS1) reaffirmed; active servicing rose to ~$10.3B, providing a positive-carry credit hedge as workouts continue .

Quotes

“We are exceptionally well-positioned to capitalize on today’s environment.” – Barry Sternlicht, Chairman & CEO .
“The recent repricing of our term loans to best-in-class levels reflects the market’s confidence in our strategy and credit profile.” – Jeffrey DiModica, President .

What Went Wrong

Non-GAAP realized loss on a foreclosed office sale: management reported a $44M DE loss (versus ~$4M GAAP gain) tied to the Houston office asset disposition, tempering DE contribution despite overall beat; highlights non-GAAP vs GAAP divergence .
Ongoing legacy asset overhang and timelines: management still carries ~$1.7–$1.8B of nonaccrual/REO exposure, targeting step-downs through 2026–2027; some syndicated and downtown LA exposures will take time to resolve .
Life sciences headwinds: foreclosure on a $56M nonaccrual Boston life science asset (basis above appraised value), reflecting sector oversupply and slower leasing; credit migration impacts continue to be actively managed .

Financial Results

Earnings and Revenues vs prior periods and estimates

Metric	Q2 2024	Q1 2025	Q2 2025
Distributable EPS ($) – Actual	$0.48*	$0.45	$0.43
Distributable EPS vs S&P Consensus ($)	$0.4861 est.*	$0.4483 est.*	$0.382 est.* vs $0.43 actual (beat)
GAAP EPS ($) – Actual	—	$0.33	$0.38
Company Total Revenues ($MM)	—	$418.18	$444.28

Values marked with * are from S&P Global.

S&P Global revenue (Street basis; not directly comparable to company “Total revenues”)

Q2 2024: $66.89MM*, Q1 2025: $126.02MM*, Q2 2025: $147.48MM*. Values retrieved from S&P Global.

Notes: Company “Total revenues” include segment revenues with VIE adjustments; S&P’s “Revenue” definition for mortgage REITs can differ materially. Values retrieved from S&P Global.

Segment breakdown (Q2 2025)

Segment	Total Revenues ($000s)	Distributable Earnings ($000s)	DE per Diluted Share ($)
Commercial & Residential Lending	343,907	174,217	0.49
Infrastructure Lending	67,184	20,825	0.06
Property	16,477	17,432	0.05
Investing & Servicing	53,785	51,580	0.15
Corporate	536	(112,965)	(0.32)
Subtotal (before VIEs)	481,889	—	—
Securitization VIEs	(37,606)	—	—
Total	444,283	151,089	0.43

KPIs and Balance Sheet Highlights (Q2 2025)

KPI (period end or quarter, as noted)	Value
Capital deployed (Q2 / 1H25)	$3.2B / $5.5B
Commercial lending commitments funded (Q2)	$1.9B originations; portfolio +$946MM QoQ to ~$15.5B; notable $500MM data center financings
Infrastructure lending (Q2)	$700MM committed ($642MM funded); portfolio to ~$3.1B; fifth CLO priced at SOFR+1.73; 1–2 more CLOs expected in 2025
LNR special servicing	CSS1/CS1 ratings reaffirmed; active servicing ~$10.3B; named servicing ~$102B
Liquidity (post-quarter)	~$1.4B as of Jul 15, 2025
Unencumbered assets	~$5.0B
Unrealized gains in property	>$1.4B
Adjusted debt to undepreciated equity	2.5x (Q2), up modestly on originations
Undepreciated book value per share	~$19.65 (Q2) vs $19.76 (Q1)
Dividend	Paid $0.48 for Q2 and declared $0.48 for Q3
Term loan repricing	$1.6B at SOFR+200 and +175, both at par

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Color	Change
Dividend per share	Q3 2025	$0.48 declared historically	Board declared $0.48 for Q3 2025; never cut dividend to date	Maintained
CRE loan portfolio	FY2025	—	Management expects CRE loan portfolio to reach record by year-end on elevated originations	Positive outlook
Infrastructure CLOs	2025	—	Expect 1–2 additional CLOs this year; lowest historical cost of funds achieved	Positive
Net lease acquisition (Fundamental)	2026+	—	Expected accretive to DE next year with growing contribution as platform scales	Positive
Balance sheet cost of capital	Ongoing	—	Repriced term loans at sector-best spreads; aim to further reduce funding costs and progress to investment grade	Improved funding access

No formal numerical revenue/margin/tax/OpEx guidance provided; commentary above reflects management’s directional outlook.

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Deployment & pipeline	Planning to go “fully on offense” in 2025; liquidity strong	$2.3B Q1 investing; strong Q2 pipeline; target record year ex-2021	$3.2B Q2 deployment; 1H ahead of 2024; record CRE portfolio expected YE	Improving
Credit/reserves	Repo on 4/5-rated loans reduced; targeted REO/nonaccrual exit by 2027	CECL down; REO resolutions at/above basis; DE will absorb realized losses	Portfolio risk rating 2.9; some foreclosures; timelines extend on syndicated/DTLA assets	Stabilizing
Funding costs/access	Corporate debt extended; tightest floating spreads in history	$500MM sustainability notes (swapped)	Term loans repriced at SOFR+200/+175; strong CLO market	Improving
Special servicing/CMBS	Largest named servicer ($110B)	Active ~$9.6B; conduit profitable	Active ~$10.3B; ratings reaffirmed; counter-cyclical hedge	Strong/steady
Data centers/AI	Early lending/infrastructure tailwinds	Focus areas include data centers, Europe, multifamily	$500MM+ data center financings; robust opportunity set	Expanding
Net lease entry	Considering expansion into equity/NNN	—	Closed $2.2B Fundamental Income; accretive growth plan	New growth cylinder
Macro/tariffs	Tariffs inflationary; rates/demand uncertainty	Weaker consumer; forward cuts supportive of RE	Expect rate cuts; RE firming; AI/data centers tailwinds	Better rate outlook

Management Commentary

Strategic positioning: “While commercial real estate lending remains a foundational part of our business, it now represents about half of our asset base—a reflection of how far we've diversified and evolved.” – Barry Sternlicht .
Net lease rationale: “This acquisition adds a powerful new important vertical where we hope to deploy significant capital and grow our earnings going forward with stable recurring cash flows.” – Barry Sternlicht .
Balance sheet strength: “With $5.0 billion in unencumbered assets, over $1.4 billion in unrealized property gains, no near-term debt maturities... we have the tools and financial strength to drive disciplined growth.” – Jeffrey DiModica .
Non-GAAP dynamics: “Net, there was a $4 million GAAP gain and a $44 million DE loss” on the Houston office sale .

Q&A Highlights

CRE originations pace and rate sensitivity: Management targets near-record 2025 CRE originations; rate cuts should accelerate refis and transaction volumes, potentially lifting deployment and aiding legacy workouts .
Net lease platform ramp: Pipeline rebuilding quickly with middle-market and larger portfolio opportunities; expect accretion to DE next year and increasing thereafter as scale is achieved .
Infrastructure lending economics: Asset spreads moderated but funding stayed tight; business funds efficiently via bank lines and non-mark-to-market CLOs; typical loan duration 5–7 years .
Credit stabilization and sector views: Hotels performing with cushion; life science exposure minimal but challenged; continued measured progress in resolving nonaccruals .
Resolution timelines: Aim to halve the nonaccrual/REO book by 2026 and again by 2027; certain syndicated and downtown LA assets may take longer .

Estimates Context

EPS: Q2 2025 Distributable EPS $0.43 vs S&P Global consensus $0.382 (beat). Q1 2025 actual $0.45 vs $0.448 est. Q2 2024 actual $0.48 vs $0.486 est.* Values retrieved from S&P Global.
Revenue: S&P Global “Revenue” for Q2 2025 $147.5MM, Q1 2025 $126.0MM, Q2 2024 $66.9MM*, which are not directly comparable to company “Total revenues” due to mortgage REIT reporting nuances and VIE eliminations. Values retrieved from S&P Global.

Where estimates may adjust:

Street EPS likely revises higher on stronger deployment momentum, net lease accretion path, and funding cost improvements; realized losses from ongoing resolutions temper near-term upside but trajectory improving .

Key Takeaways for Investors

DE beat with accelerating deployment and diversified engines; expect continued origination strength and incremental contribution from net lease in 2026+ .
Funding costs improved meaningfully (term loans at SOFR+200/+175) with ample unencumbered assets and no near-term maturities—supporting growth and resiliency .
Credit risk contained and trending better: risk rating stable at 2.9, CECL modestly down, and methodical progress on nonaccruals/REO; timelines remain asset-specific .
Counter-cyclical servicer earnings and conduit profitability continue to hedge macro volatility, while infrastructure lending scales with tight financing and non-MTM CLOs .
Net lease platform adds a durable, long-duration cash flow vertical with ABS financing access—broadening investor appeal and potentially compressing cost of capital over time .
Trading lens: Narrative catalysts include visible deployment momentum, accretive net lease ramp, and further liability optimization—offset by ongoing legacy resolutions; tone improving with expected rate cuts .

Sources: Q2 2025 press release and 8-K ; Q2 2025 earnings call ; Q1 2025 press release/call ; net lease acquisition and financing press releases/8-K . Values marked with * are from S&P Global. Values retrieved from S&P Global.

STARWOOD PROPERTY TRUST, INC. (STWD)·Q2 2025 Earnings Summary