Starwood Property Trust Posts $389.7 Million Q3 Loss on Loan Reserves

Starwood Property Trust lost $389.7 million, or $1.08 a share, in the third quarter, the commercial real estate lender said before the market opened on Friday, Nov. 6, after setting aside $336.6 million for credit losses. The loss also included $32.2 million of non-cash property impairments, according to the results release it furnished to the SEC with a Form 8-K.

Starwood (NYSE: STWD), based in Miami Beach, Florida, is an affiliate of Starwood Capital Group and manages a $32 billion portfolio of real estate and infrastructure debt and equity. Distributable earnings, the non-GAAP measure it uses to judge its dividend, were $116.8 million, or $0.31 a share. Before realized gains and losses in commercial lending, they were $155.2 million, or $0.41 a share. The company declared a $0.48 dividend.

Why did Starwood lose money in the third quarter?

Mostly because of its commercial and residential lending segment, which lost $236.6 million. Nearly all of the $336.6 million credit loss provision came from that segment. The segment also booked a $121.4 million loss on the change in fair value of mortgage loans and $38.4 million of realized losses on foreclosed property sales. The corporate segment lost $234.9 million, including $113.5 million of interest expense.

Segment	Q3 net income (loss)	Q3 distributable earnings
Commercial and residential lending	$(236.6) million	$146.6 million
Infrastructure lending	$31.1 million	$27.3 million
Property	$20.0 million	$45.9 million
Investing and servicing	$30.6 million	$45.5 million
Corporate	$(234.9) million	$(148.6) million
Total	$(389.7) million	$116.8 million

Source: Starwood Property Trust third-quarter 2026 results release, Exhibit 99.1 to Form 8-K.

"Although our borrowers are feeling the pain of higher interest costs, our balance sheet and liquidity remain very strong," Chairman and Chief Executive Barry Sternlicht said in the release. He said the company still expects to resolve almost half of the underperforming assets it started the year with.

Is Starwood still lending?

Yes. It invested $3.2 billion in the quarter and $8.2 billion in the first nine months. The quarter included $2.4 billion of commercial loans, its highest in four years, bringing the commercial lending portfolio to a record $17.8 billion. Interest income from loans was $409.3 million across its segments.

Earlier in the year, before rates rose, Starwood completed about $2.1 billion of financing transactions "at rates and spreads below those available today," President Jeffrey DiModica said. Our warehouse line of credit guide explains the repurchase and credit facilities that fund commercial lenders. For current benchmark rates behind floating-rate loans, see hard money and private lending rates today.

Starwood repurchased a record $108 million of its own shares in the quarter. Fitch reaffirmed its highest rating, CSS1, for LNR's commercial special servicer, the company said. The results follow losses at smaller peers this week, including Granite Point Mortgage Trust. Starwood holds its earnings call at 10 a.m. ET on Nov. 6.