Executive Summary

Q3 2025 DE per diluted share was $0.40 and GAAP EPS was $0.19; DE missed S&P Global consensus of ~~$0.44, driven by partial-quarter dilution from the Fundamental (net lease) acquisition (~~$0.03), higher depreciation (~$0.04 GAAP EPS impact), and cash drag from ~$2.3B capital raises, with management expecting earnings to normalize as capital is deployed and the net lease platform scales . Values retrieved from S&P Global.*
Reported total revenues were $0.489B; liquidity reached a record $2.2B, positioning the company to continue elevated originations across lending verticals .
Investment activity remained strong: $4.6B committed in Q3 (including $2.2B net lease, $1.4B commercial lending, and a record ~$0.8B infrastructure lending), and ~$10.2B year-to-date, with management citing 2026 as the year when the full earnings power of deployed capital is realized .
Capital markets access was a differentiator: repriced term loans to record-tight spreads (+175bp/+200bp), issued a 7-year Term Loan B at +225bp, and executed additional unsecured notes (5.25% 2028; 5.75% 2031, upsized to $550M), further extending and diversifying funding .
Narrative/catalysts: near‑term “trough” in DE coverage acknowledged with expected sequential improvement; strengthening credit backdrop and shrinking office exposure (8% of assets) support sentiment; net lease scaling, infrastructure CLOs, and affordable housing cash‑out refis are potential upside catalysts into 2026 .

What Went Well and What Went Wrong

What Went Well

Record liquidity and best-in-class capital access: $2.2B liquidity at quarter‑end; repriced term loans at +175/+200 and issued a 7-year TLB at +225, with additional unsecured issuance (5.25% 2028; 5.75% 2031 upsized to $550M) underscoring market confidence .
Strong origination and portfolio growth: $4.6B of new investments in Q3 (net lease $2.2B, commercial lending $1.4B, infrastructure ~$0.8B), with management guiding acceleration of earnings impact in 2026 as deployment and future fundings ramp .
Strategic diversification via net lease: acquired Fundamental, a $2.2B triple‑net platform (475 properties, 61 industries, 43 states, 100% occupancy, 17.1‑year WALT), adding long‑duration, recurring cash flows and ABS Master Trust financing; CEO emphasized potential for rapid scale and eventual value realization .

What Went Wrong

Near‑term DE dilution and GAAP EPS pressure: partial-quarter contribution and depreciation from the net lease acquisition (~$0.03 DE dilution; ~$0.04 GAAP EPS headwind) plus cash drag from capital raises weighed on Q3 results, contributing to a DE miss vs consensus . Values retrieved from S&P Global.*
Credit costs remain a headwind: Q3 included a $28.4M credit loss provision; reclassification of a $33M mezzanine loan to “credit‑deteriorated” and select downgrades (two loans to 5‑rated) reflect ongoing credit normalization, though reserves are already embedded .
Servicing tailwinds offset by timing/mix: while special servicing activity and conduit securitizations were healthy, DE benefits were partially offset by broader portfolio ramp dynamics and cash drag in the quarter .

Financial Results

Headline Results vs Prior Periods

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($USD Millions)	$418.2	$444.3	$488.9
GAAP Net Income ($USD Millions)	$112.3	$129.8	$72.6
GAAP EPS ($)	$0.33	$0.38	$0.19
Distributable Earnings ($USD Millions)	$156.3	$151.1	$148.6
DE per Diluted Share ($)	$0.45	$0.43	$0.40

Actual vs S&P Global Consensus (Q3 2025)

Metric	Actual	Consensus	Surprise
DE per diluted share (Primary EPS proxy)	$0.40	$0.439*	Miss (−$0.04) Values retrieved from S&P Global.*
Revenues ($) — Company Reported Total	$488.9M	—	—
Revenues ($) — S&P “Revenue” definition	$125.7M*	$479.7M*	N/M; methodology mismatch Values retrieved from S&P Global.*

Note: For mortgage REITs, S&P’s “Revenue” series can differ materially from company-reported “Total Revenues” due to definitional treatment (e.g., net interest income vs consolidated totals). We anchor company comparables to reported totals and use S&P data only for consensus benchmarking . Values retrieved from S&P Global.*

Segment Distributable Earnings Trend ($USD Millions)

Segment	Q1 2025	Q2 2025	Q3 2025
Commercial & Residential Lending	$178.8	$174.2	$159.0
Infrastructure Lending	$20.0	$20.8	$31.6
Property	$16.3	$17.4	$27.7
Investing & Servicing	$49.6	$51.6	$46.6
Corporate	$(108.4)	$(113.0)	$(116.2)
Total DE	$156.3	$151.1	$148.6

KPIs (Q3 2025 snapshot)

Investments/Originations: $4.6B in Q3; YTD $10.2B .
Net Lease (Fundamental) portfolio: 475 properties; 61 industries; 43 states; 100% occupancy; 17.1‑year WALT .
Liquidity: record $2.2B .
Leverage: debt-to-undepreciated equity ratio 2.5x .
Reserves: $642M total (CECL $469M + REO impairments $173M) = 3.8% of lending + REO; undepreciated book value $19.39; reserves equate to $1.73 per share .
Commercial lending: $1.4B originations (nearly all funded); $1.3B repayments; portfolio to $15.8B .
Infrastructure lending: record $791M commitments; $678M funded; $691M repayments; portfolio steady at ~$3.1B .
Servicing: named portfolio $99B; active special servicing $10.6B (Q3 transfers mostly office) .

Guidance Changes

STWD does not provide formal quantitative guidance; management offered directional commentary.

Metric/Topic	Period	Previous Guidance	Current Commentary	Change
DE/dividend coverage trajectory	Near-term (Q4’25–early 2026)	N/A	Management reiterated a modeled “trough” through early 2026; expect sequential improvement as deployment ramps, future fundings occur, and net lease scales .	Directional: trough then improve
Origination pace	2025–2026	N/A	2025 on pace near records; expect to maintain elevated origination pace; full earnings power felt in 2026 .	Maintain/positive bias
Office exposure	Ongoing	N/A	Reduced to ~8% of total assets, down from 9% last quarter .	Improving risk mix
Liquidity deployment	Next few months	N/A	Excess liquidity (~$2.2B) expected to normalize as fundings proceed and secured debt is repaid .	Deploy/normalize
Dividend	Recurring	$0.48 per share	Continued payment of $0.48 per quarter; 47th straight quarter declared in Q2; Q3 paid .	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Net lease platform integration	Announced acquisition; discussed scale benefits, ABS Master Trust, expected accretion in 2026+ .	Partial-quarter dilution; depreciation headwind; pipeline rebuilding; first securitization post-close at +145bp; targeting rapid scale .	Building; near-term dilutive, medium-term accretive
Liquidity and capital markets	Term loans repriced at record-tight spreads; active issuance pipeline .	$3.9B executed (repricings, HY, TLB, equity); only ~$400M corp debt due before 2027 .	Strengthening
Credit and reserves	CECL decreased in Q2 on better macro; selective upgrades/downgrades .	$28.4M provision; specific reclassifications; management sees limited further build barring adverse rates .	Stabilizing with pockets of pressure
Infrastructure lending	CLOs at tight costs; mid-teens ROEs; growing book .	Record commitments; sixth infrastructure CLO post-quarter; ~2/3 financed via non‑recourse, non‑MTM CLOs .	Scaling at attractive funding
AI/technology initiatives	Limited explicit detail prior.	Using AI to enhance analytics and efficiency across lending/servicing; expected margin benefits over time .	Increasing emphasis
Affordable housing (Woodstar)	Anticipated refi and rent roll-ups; embedded gains .	$614M refi across ~30% of assets; ~$302M cash‑out; management reiterates ~$1.5B+ embedded gain .	Unlocking value
Office exposure	Managed down; selective upgrades .	Down to 8% of total assets; ongoing resolutions .	Improving mix

Management Commentary

“We once again delivered by acquiring Fundamental, a $2.2 billion portfolio of durable, long-term, high quality net lease assets… we believe we can meaningfully grow this net lease portfolio accretively in the coming years.” — Barry Sternlicht, Chairman & CEO .
“Over the past year… raising nearly $3.0 billion across equity, term loans, and unsecured debt, all at record-tight levels… These transactions highlight both the market's confidence in our credit profile and our disciplined financial management.” — Jeffrey DiModica, President .
“This quarter, we reported distributable earnings, or DE, of $1.49 per share. GAAP net income was $0.19 per share. Our new net lease acquisition… contributed to lower GAAP earnings due to $0.04 of depreciation and lower distributable earnings due to $0.03 of dilution…” — Rina Paniry, CFO .
“We built this company to perform in all environments… diversified across lending verticals, servicing, and owned properties… allows us to invest through cycles and position for growth as the markets normalize.” — Jeffrey DiModica .

Q&A Highlights

DE Coverage and Timeline: Management reaffirmed a modeled trough into early 2026, with sequential improvement as deployments/fundings ramp and Fundamental scales; they see a path back to historical earnings “in the not too distant future” .
Credit Migration and Reserves: Mix of upgrades/downgrades with selective foreclosures expected; management does not expect a significant reserve build from here absent rate path changes .
Net Lease Cap Rates: Reported cap rate optics temporarily low due to partial quarter; implied steady-state closer to ~6.9–7% with no goodwill; expect normalizing as portfolio scales .
Data Center Financing Risk: Underwriting focuses on counterparty strength and fully amortizing loans over the lease term, minimizing residual risk; view hyperscalers as strong credits .
Liquidity Deployment: $2.2B liquidity viewed as excess; expected to normalize in months as fundings proceed and secured debt is repaid; repayments are picking up alongside spread compression .

Estimates Context

Q3 DE per diluted share was $0.40 vs S&P Global consensus ~$0.44 — a miss of ~$0.04, primarily due to partial-quarter dilution from the net lease acquisition, higher depreciation, and cash drag from capital raises, with normalization expected as deployment ramps . Values retrieved from S&P Global.*
S&P Global “Revenue” series shows actual ~$126M vs consensus ~$480M, which materially differs from company-reported total revenues of ~$489M; this reflects definitional differences common for mortgage REITs (e.g., net interest income basis vs consolidated totals) . Values retrieved from S&P Global.*

Key Takeaways for Investors

Near‑term trough acknowledged; sequential improvement likely as net lease scales and excess liquidity is deployed; 2026 should reflect fuller earnings power of recent investments .
Capital markets strength (repricings at record-tight spreads; multiple unsecured/term loan transactions) reduces funding costs and extends maturities, supporting growth and stability .
Diversification pillars working: commercial lending pipeline robust, infrastructure financing scaling with attractive non‑recourse CLO funding, special servicing revenues elevated amid office resolutions .
Credit normalization continues but appears manageable with reserves embedded; office exposure reduced to ~8% of assets .
Affordable housing (Woodstar) and ABS-backed net lease platform provide optionality to unlock value and support DE through cash‑out refis and securitizations .
Watch estimate revisions: modest upward bias to forward DE if deployment pace and securitization spreads remain favorable; short-term sentiment hinges on evidence of quarterly DE progression and net lease pipeline conversion .

Additional Q3 2025 press releases and capital markets actions:

Priced $500M 5.25% unsecured notes due 2028 (sustainability bonds) .
Announced offering of $500M unsecured notes due 2028 (sustainability bonds) .
Upsized and priced $550M 5.75% unsecured notes due 2031 (sustainability bonds) .
Q3 earnings date press release (procedural) .

Citations:

Q3 2025 press release and segment/DE/balance sheet:
8-K and Exhibit 99.1 (press release):
Q3 2025 earnings call transcript:
Q2 2025 results and call:
Q1 2025 results:
Additional Q3 press releases (funding):

Footnote: Values marked with an asterisk (*) were retrieved from S&P Global.

STARWOOD PROPERTY TRUST, INC. (STWD)·Q3 2025 Earnings Summary