Stwd Nov 2014

`

1

Starwood Property Trust Investor Presentation | November 2014

STWD Today

2

Leading publicly traded non-bank real estate finance company

Largest commercial mortgage REIT in the United States with a market capitalization of $5.0 billion (1)

Total capital deployed since inception of $15.5 billion (1); current portfolio of over $7.3 billion (2)

Focused on providing a secure dividend for investors; current in-place yield of 8.5%+ (1)

1

Highly diversified and scalable investment platform with proven track record

Broad wholesale asset origination, acquisition and servicing model

Flexibility and expertise to invest across the real estate finance sector to generate attractive returns

Total annualized shareholder returns of 14.5% and total return of 102.9% since IPO (3)

2

Unparalleled access to global transaction sourcing, underwriting, and asset management

Over 450 employees dedicated to Starwood Property Trust globally

Ability to leverage Starwood Capital Group’s 550+ employees and 23 years of transaction experience

Position as largest commercial special servicer provides a unique window into the CRE finance markets

3

(1) Data as of October 31, 2014 (2) Includes Starwood lending segment assets and LNR net investments as of September 30, 2014 (3) Source: Bloomberg. Period between 8/11/2009 and 10/31/2014, includes reinvestment of dividends

Starwood Property Trust Today

Company Overview

• First Mortgages • Construction Loans

• Mezzanine Loans

• Preferred Equity

• RMBS

• CMBS

• CMBS B-pieces

• Conduit Loans

• Value-Add Real Estate Equity

•?

3

Evolution of STWD’s Business Lines

STWD’s has diversified its business over time in order to find the best risk adjusted returns for shareholders while continuing to leverage its expertise and infrastructure

Note: Figures as of September 30, 2014 unless otherwise noted

•First Mortgages

•Mezzanine Loans

•RMBS

•CMBS

Target Investments - IPO Target Investments – Today and beyond

First Mortgages

Mezzanine Loans

RMBS

CMBS

First Mortgages

Mezzanine Loans

RMBS

CMBS

CMBS B-pieces

Conduit Loans

Construction Loans

Preferred Equity

Value-Add Real Estate

?

STWD’s Manager – Starwood Capital Group

Founded in 1991 by Barry Sternlicht, Starwood Capital Group is one of the world’s leading privately held alternative investment firms with a focus on global real estate

4

Outstanding Performance

Acquired over $55 billion of assets over the past 23 years; current assets under management in excess of $37 billion

Experienced Executive Team

Distinctive Corporate Transactions Expertise

Worldwide Insight and Access

Investing Discipline

Extensive Asset Class Experience

Seasoned executive team that has been together for over 14 years with an average of 28 years of industry experience

A leader in public-private/private-public market executions including the creation of five NYSE-listed companies

Twelve offices globally provide transaction flow and insight into economic and local market trends

Significantly decreased acquisition activity when the market became overheated in 2006/2007


Type Multifamily/Condos

Office Retail Hotels Land

Experience 70,000 units 44 million sf 39 million sf 2,200 hotels 46,000 lots



STWD affiliates provide information and expertise which give the Company an edge in sourcing, underwriting, and executing transactions across various geographies and asset classes

5

Starwood’s Synergistic Business Lines

Starwood Retail Partners (SRP)

Manages one of the largest regional mall operating platforms

in the U.S., with a portfolio of 28

properties totaling more than 26.8

million square feet of gross leasable area

and $5 billion of gross asset value.


Starwood Waypoint Real Estate Group

(NYSE: SWAY)

One of the largest publicly traded

owners and operators of single-family residential

rental homes in the U.S. The company

also invests in NPLs to supplement its

growth.

Starwood Land Ventures (SLV)

Focused on land

acquisition, development, and financing. SLV has

acquired over 17,000 lots in over 60

communities in 3 states and is a

leading provider of sites to the

homebuilding industry.

SH Group

Hotel management

team brings operational expertise in areas of revenue

management, marketing, food & beverage, systems,

and cost management.

Currently manage two brands: 1Hotels and Baccarat Hotels

& Resorts.

Starwood Energy Group

Specialized in energy

infrastructure investments, with a focus on the natural gas and renewable power generation, and transmission sectors. Starwood

Energy Group manages total equity commitments of over

$2 billion.

STWD’s Value Proposition

6

Proven Business Model

Disciplined approach to investing across the real estate capital structure Floating rate business model and position as leading special servicer

provide protection against higher interest rates

Balance Sheet

Advantage

Diversified Real Estate

Platform

Broad Access to Capital Markets

Focused on Risk

Mitigation

Scale enables ability to lead entire large loan transactions Flexibility to offer loan structures “outside the box” Expertise in structuring complex transactions

Special servicing business in US and Europe provides unique visibility Ability to leverage Starwood Capital Group’s international presence,

experience across real estate asset classes, and terabytes of real estate data compiled over the past 23 years

Proven access to multiple sources of debt and equity capital $4.8 billion in credit capacity across 12 facilities and two convertible

senior note issuances

Culture of approaching real estate lending from an owner’s perspective Committed to creating shareholder value through deliberate approach to

investing across the real estate finance sector


STWD’s Value Proposition

CRE Transaction Volumes & Expected Debt Maturities Regulatory Items Potentially Impacting CRE

Lending Segment – Underwriting Metrics

7

Compelling Market Opportunity

The changing regulatory environment, coupled with increasing real estate transaction activity, can lead to lending opportunities for a flexible and well capitalized non-bank finance company like STWD

Compelling Market Backdrop

Reform Key Dates Impact

Basel III – Risk Based Capital Ratios

• Phase-in 2015-2019

• Risk weightings for commercial real estate assets require banks to maintain higher capital levels

The Volcker Rule

• Finalized December 2013

• Implementation July 2017

• Prohibits banks from sponsoring a hedge fund or private equity fund; limits banks’ fund ownership interests

Risk Retention Rules

• Finalized October 2014

• Implementation Fall 2016

• Requirement for sponsors of securitization transactions to retain a certain level of risk in those transactions, that must be retained for a period of 5 years

Source: CRE Transaction Volumes: Real Capital Analytics, includes all property types. CRE Debt Maturities: Trepp as of 4Q13. Includes bank, life company, CMBS, and other non-residential mortgage debt. CMBS Debt Maturities: Trepp as of 9/30/2014

($ billions)

$68

$146

$234

$297

$361 $360 $356

$335

$357

$16

$80

$111 $112

2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E

CRE Transaction Volume CRE Debt Maturities CMBS Maturities


8

Compelling Market Opportunity Portfolio Overview

STWD has built a diverse $7.3 billion portfolio across its Lending and LNR segments

Lending Segment Portfolio Overview LNR Segment Portfolio Overview

Lending Segment

83% LNR

Segment 17%

$6.1 billion carrying value

55% First mortgages

24% Mezzanine loans

6% Subordinate mortgages

5% Preferred equity

10% CMBS, RMBS, Unconsolidated investments

Fully extended weighted average life of 4.0 years

$1.2 billion carrying value

57% CMBS

20% Conduit loans

17% Special servicing intangibles

6% Unconsolidated investments


Lending Segment Strategy

Stabilized Transitional

Asset Stabilization

Loan

Du

ration

Lon

g Term

(7-1

0 years)

Sho

rt Term

(3-5

years)

STWD focuses primarily on assets with some degree of transition, which could include: lease-up, redevelopment, or construction

Traditional lenders such as banks, life insurance companies, and CMBS conduits focus on stabilized assets and typically offer long term fixed rate loans

Lending Segment Strategy

Lending Segment Business Model

Originate floating rate loans with an average duration of 3-5 years

Flexibility and creativity to structure

loans to align both borrower and lender needs

Significant balance sheet and access

to capital allow for focus on large loans

Ability to underwrite and close loan transactions quickly and efficiently

Optionality to sell-off an A-note or finance a whole loan on a secured credit facility

9 Note: Figures as of September 30, 2014 unless otherwise noted

Asset Yield

(L+)

4.75%

Cost of

Financing

(L+)

(2.00%)

Net Interest

Margin (L+)

2.75%

Leverage 2.0x

Gross ROE of

Junior (L+) (1)

10.25%

Loan Origination and Structuring Process

1. Originate Whole Loan 2. Split Loan into Senior and Junior Tranches

3. Sell or Finance Senior Portion of Loan 4. Retain Junior Portion of Loan

Originate a 75% LTV first mortgage at a rate of L + 4.75%

$75mm

$100mm

Building First Mtg.

$75mm

First Mtg.

$50mm

Senior

$25mm

Junior

Senior tranche has a 50% LTV while the junior tranche remains at 75% LTV

$50mm

Senior

Optionality to sell or finance the 0% - 50% LTV senior loan tranche

o Sell 100% of Senior Loan

o Finance 100% of Senior Loan

o Sell Participation in Senior Loan

Assume that STWD can sell or finance 100% of the senior loan at a cost of L + 2.00%

STWD benefits from the lower cost of financing on the senior portion of the mortgage

STWD’s investment

represents 50%-75% LTV

A

B

C

A

B

C

Loan Origination and Structuring Process

Junior

Note: Asset yield equates to $3.56M of interest income, cost of financing equates to $1.0M of expenses and STWD earns $2.56M on its retained investment of $25M or a 10.25% return 10

$75mm

First Mtg.

$25mm Equity

$25mm

Junior

$75mm

First Mtg.

$50mm

Senior $25mm

Junior

Lending Segment Portfolio Overview

Total Portfolio Size(1) vs. Weighted Average LTV (2)

STWD has maintained its LTV discipline as it has grown its lending portfolio to over $6.0 billion

(1) In millions, includes all lending segment assets as of 9/30/2014. (2) As of 9/30/2014. Underlying property values are determined by STWD’s management based on its ongoing asset assessments, and loan balances that are the face value of a loan regardless of whether STWD

has purchased the loan at a discount or premium to par. For any loans collateralized by ground-up construction projects without significant leasing or units with executed sales contracts, the fully funded loan balance is included in the numerator and the fully budgeted construction cost including costs of acquisition of the property is included in the denominator. For ground up construction loans which have significant leasing or units under contract for sale the fully funded loan balance is included in the numerator with an estimate of the stabilized value upon completion of construction included in the denominator


11

$2,136

$2,513 $2,383

$2,834

$3,072 $3,201

$3,609

$4,087 $4,099 $4,147

$4,455

$5,375

$5,603

$5,819

$6,094

64.7%

67.8%

65.7%

66.5%

64.1%

64.9%

62.8%

63.1%

64.0% 64.0%

65.1% 65.5% 65.6%

64.5% 64.2%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14


Loan Balance by Property Type Loan Balance by Region

STWD’s lending portfolio is diversified by geographic location and property type

Lending Segment Portfolio Diversification

12

$0.0

Office, 37%

Hospitality, 27%

Multi-family, 13%

Retail, 7%

Mixed Use, 7%

Residential, 5%

Industrial, 3%

West, 30%

North East, 23% International, 13%

South East, 11%

Mid Atlantic, 10%

Midwest, 8%

South West, 5%

Note: Data as of September 30, 2014 unless otherwise noted


STWD has funded over $10.3 billion across 155 loans since inception and has $0 of realized loan losses to date

Lending Segment Credit Performance

13

$0.0

Cumulative Lending Segment Loan Funding Realized Loan Losses to Date


$0.0

($ millions)

* As of 10/31/2014

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2009 2010 2011 2012 2013 2014*

Expected CMBS Maturities


14


Special servicing revenues provide a hedge against higher interest rates and credit deterioration; the upcoming wave of CMBS maturities will potentially result in higher volumes of assets in special servicing

Value Embedded in LNR’s Special Servicing Portfolio

($ billions)

Source: Trepp LLC

Note: Data as of 9/30/2014 2014 Maturities represent maturities from 9/30/2014-12/31/2014

Key LNR Statistics

STWD’s subsidiary LNR is one of the largest and most experienced special servicers in the US

LNR manages an active CMBS portfolio

with $698 million of carrying value and is named special servicer on over $15.0 billion of loans

LNR is the named special servicer on $102 billion or 32% of all CMBS maturities through 2017

LNR won special servicing assignments on 21.7% of CMBS issuances year-to-date, ranked #1 in the league table

LNR’s subsidiary Hatfield Phillips is a

leading primary and special servicer in Europe

$15.5

$80.3

$111.4 $112.1

$157.9

$6.3

$29.9 $28.7 $37.5

$28.8

2014 2015 2016 2017 2018+

Total LNR Share

0.6x 0.6x

0.5x

0.8x

1.1x

0.9x

1.0x

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Equity Market Capitalization

$5.0

Total Debt Outstanding

$3.8

Historical Debt-to-Equity Ratio (2)

STWD Key Credit Metrics

Lending Segment – Underwriting Metrics Compelling Market Opportunity

As part of STWD’s approach to risk, the Company has maintained a very conservative balance sheet, consisting of both secured asset-level and corporate-level debt

Total capitalization of $8.8B

As of September 30, 2014, $3.8B aggregate outstanding balance. A maximum borrowing capacity of $4.8B under 12 financing facilities, which are with 8 leading financial institutions, and two convertible notes

Subsequent to quarter end, maximum borrowing capacity increased to $5.4B as a result of a convertible note issuance of $0.4B and an upsize of a revolving repo facility by $0.3B

Interest coverage ratio of 4.37x

Fixed charge coverage ratio of 4.13x

Issuer rating of Ba3/BB; Outlook Stable

Capitalization

($ billions)

Starwood Waypoint (NYSE:SWAY) Spin Off

Note: As of September 30, 2014, unless otherwise indicated (1) Based on outstanding shares as of September 30 of 222.4 million and closing stock price on October 31 of $22.56 (2) Debt is comprised of secured financing agreements and convertible senior notes. Equity is STWD equity

(1)

15

Conservative Capitalization


The Company estimates that a 100 basis point increase in LIBOR would result in an increase to income of $17.5M

3.0% 2.5% 2.0% 1.5% 1.0%

Income / (Expense): Increase Increase Increase Increase Increase

Investment Income 4,283.7 132.9 109.5 86.2 62.9 39.9

Interest Expense (2,580.0) (74.0) (61.0) (48.2) (35.3) (22.4)

Net Investment Income 1,703.7$ 58.9$ 48.5$ 38.0$ 27.6$ 17.5$

Variable Rate

Investments &

Indebtedness

The numbers in the above table do not include any benefit that would be realized by LNR, whose special servicing revenues would likely benefit from a rising rate environment due to an expected increase in the number of loans that would enter special servicing

The following table summarizes the impact to annual net income from a specified hypothetical change in LIBOR (amounts in millions):

Interest Rate Risk Management

16 Note: Data as of September 30, 2014 unless otherwise noted

STWD should benefit from a rising interest rate environment given its high volume of LIBOR-based floating rate loans

Portfolio Statistics

78% of the Lending Segment loan portfolio is indexed to LIBOR

87% of the floating rate loan portfolio in the Lending Segment benefits from having a LIBOR floor at an average rate of 0.36%, which is above the current LIBOR rate

The fixed rate loan portfolio carries an attractive weighted average coupon of 8.7%

The Lending Segment’s fixed rate loan portfolio is financed using floating rate liabilities, the Company hedges 100% of the floating rate exposure back to fixed

Lending Segment Assets


Fixed Rate Loans 22%

Floating Rate Loans 78%

Lending Segment Liabilities

Secured Financings Swapped to Fixed

Rate 3%

Fixed Rate Convertible Notes

28%

Floating Rate Secured Financings 69%

Interest Rate Risk Management, continued

17 Note: Data as of September 30, 2014 unless otherwise noted

Historic Dividend Yield (1) Comparable Yields (2)


18


STWD focuses on providing a secure dividend through prudent capital deployment and in-depth risk management

Attractive Dividend Yield

(1) Source Bloomberg. Data as of 10/31/2014; excludes Starwood Waypoint (NYSE: SWAY) from stock price historically (2) As of 10/31/2014; CRE mREITs includes : CLNY, BXMT, ARI, and ACRE

8.5%

7.0%

3.7%

2.4% 1.9%

STWD CRE mREITs MSCI US REITIndex

US 10-YearTreasury

S&P 5006.00%

8.00%

10.00%

12.00%

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14


Future growth opportunities will come from a combination of leveraging STWD’s existing platform as well as pursuing new investments with meaningful synergies with STWD’s core lending business

Future Avenues for STWD’s Growth

(1)

19

Scaling Existing Businesses

Developing New Businesses Internally

Exploring New Asset Classes

Geographic Expansion

Strategic Acquisitions &

Alliances

Building the premiere multi-cylinder finance

company primarily

focused on the real estate

industry


Key Takeaways

20

Starwood Property Trust (NYSE: STWD)

Unmatched Expertise

• Combination of debt origination, underwriting, and asset management teams is unmatched in expertise and success in completing complex transactions

Global Organization

• Global real estate platform provides unique access to investment opportunities creating a robust pipeline for STWD

Access to Data & Information

• Servicing platform provides unprecedented access to terabytes of CRE data, providing critical intelligence for making investment decisions

Proven Business Model

• Demonstrated execution of core business of originating floating rate loans on transitional assets while maintaining a conservative overall capitalization

Unique Platform • LNR diversifies STWD’s business model and enhances transaction underwriting and asset management capabilities

Premiere Franchise

• STWD continues to secure its position as one of the premiere global finance companies focused on opportunities with attractive risk/reward attributes

Key Takeaways


This presentation contains certain forward-looking statements, including without limitation, statements concerning our operations, economic performance and financial

condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking

statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words “believe,” “expect,”

“anticipate,” and other similar expressions. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or

implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently

available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control,

and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements include, but

are not limited to:

• factors described in our Annual Report on Form 10-K for the year ended December 31, 2013, and our Quarterly Reports on Form 10-Q for the quarters ended March

31, 2014, June 30, 2014, and September 30, 2014 including those set forth under the captions “Risk Factors” and “Business”;

• defaults by borrowers in paying debt service on outstanding indebtedness;

• impairment in the value of real estate property securing our loans;

• availability of mortgage origination and acquisition opportunities acceptable to us;

• our ability to integrate the segments of LNR Property LLC, a Delaware limited liability company (“LNR”), which were acquired on April 19, 2013, into our business and

achieve the benefits that the we anticipate from this acquisition;

• potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;

• national and local economic and business conditions;

• general and local commercial real estate and residential property conditions;

• changes in federal government policies;

• changes in federal, state and local governmental laws and regulations;

• increased competition from entities engaged in mortgage lending;

• the timing, terms, structure or completion of our contemplated spin-off transaction;

• changes in interest rates; and

• the availability of and costs associated with sources of liquidity.

Additional risk factors are identified in our filings with the U.S. Securities Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended

December 31, 2013 and our Forms 10-Q for the quarters ended March 31, 2014, June 30, 2014, and September 30, 2014 which are available on our website at

http://www.starwoodpropertytrust.com and the SEC’s website at http://www.sec.gov.

If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. As a result,

our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. We undertake no obligation to

update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the

events described by our forward-looking statements might not occur. We qualify any and all of our forward-looking statements by these cautionary factors. Please keep this

cautionary note in mind as you assess the information given in this presentation.

Forward Looking Statements

21

http://www.sec.gov/

Documents

Stwd Nov 2014