From Zacks Investment Research: 2025-06-26 08:12:00

Starwood Property Trust, Inc. (STWD) continues to earn stable income from its $1.02B CMBS and CRE debt portfolio. The 2024 divestitures, including $387.1M in retail sales, generated above $100M in total gains. However, expenses rose by 19.9% CAGR since 2020, and liquidity is tight with $17.6B debt vs. $447.6M cash. The company’s portfolio optimization through acquisitions and divestitures is a positive, but rising costs and liquidity concerns remain. STWD’s Zacks Rank is currently at #4 (Sell).

Starwood stands out in the commercial real estate market with its diversified portfolio of $1.02 billion. The company has been actively managing its portfolio through acquisitions and divestitures, generating gains of $92 million and $8.3 million in 2024. Additionally, the company raised funds through an underwritten public offering to support shareholder returns. STWD also pays out quarterly dividends of 48 cents per share, with a 9.47% current dividend yield. The company’s 12-month trailing ROE stands at 8.87%, above the industry average of 7.94%.

Challenges for STWD include rising expenses, with non-interest expenses growing at a CAGR of 19.9% since 2020. Liquidity is also a concern, with $447.6M cash vs. $17.6B debt as of March 2025. Over the past year, shares of Starwood have gained 5.2%, while the industry has declined by 6.4%. Better-ranked finance stocks to consider are New York Mortgage Trust (NYMT) and Apollo Commercial Real Estate Finance (ARI), with NYMT having a Zacks Rank #1 (Strong Buy) and ARI having a Zacks Rank #2 (Buy).



Read more at Zacks Investment Research: Starwood Rides On Portfolio Optimization Amid Escalating Expenses – June 26, 2025