Starwood’s $0.48 Dividend Exceeds Third-Quarter Distributable Earnings
Key Facts
Starwood Property Trust said distributable earnings were $0.31 per share in the third quarter of 2026, versus a declared quarterly dividend of $0.48 per share, a gap that puts its dividend policy at the center of discussion after the quarterly results. Earnings rose to $0.41 per share excluding gains and losses from commercial loan resolutions, but remained below the declared dividend. Chief Executive Barry Sternlicht said on the earnings call that he would meet with the board to discuss the dividend; he did not announce a cut. The company announced on September 17 a dividend of $0.48 per share for the quarter ended September 30, payable October 15 to shareholders of record on September 30. The stock closed at $12.05 on November 6, the latest trading level in available market data.
The dividend discussion came alongside a GAAP accounting loss of $1.08 per share for the quarter, according to the earnings release, while distributable earnings presented a different picture from the accounting net result. In the third quarter of 2025, the company reported net income of $72.6 million and distributable earnings of $148.6 million, providing an annual comparison between metrics that differ from the per-share figures reported for the current quarter. Sternlicht attributed pressure on the sector to higher interest rates and an upward move in the forward yield curve. "Interest rates have risen sharply and the forward yield curve has moved up," he said. He added that higher rates had shocked the real estate sector and other rate-sensitive sectors, while borrowers face pressure from elevated interest costs.
Regarding underperforming assets, Sternlicht said the company expects to resolve nearly half of the assets that began the year below target performance, and is targeting legacy assets and reduced exposure to loans originated before 2023. "We still expect to resolve nearly half of the underperforming assets we began the year with," he said. The company invested $3.2 billion in the quarter and $8.2 billion in the first nine months of 2026. Commercial lending investments totaled $2.4 billion in the quarter, the highest level in four years, bringing the portfolio to a record $17.8 billion on September 30. The company also repurchased $108 million of common stock in the quarter, describing it as a quarterly record.
Company President Jeffrey DiModica said it had completed about $2.1 billion in financing transactions during 2026 through the results announcement, at rates and spreads below those available at the time of the announcement. "We completed about $2.1 billion of financing transactions at rates and spreads below those available today," he said. Those transactions, together with investments and share repurchases, provide financial context for the dividend discussion Sternlicht said he would have with the board. The next specific development in management's update remains the outcome of that discussion, while the earnings release announced no new dividend decision. Based on Sternlicht's forecast, the company is on track to resolve nearly half of the underperforming assets it began the year with.