- Starwood Property Trust posted Q1 2025 revenue of $504.1 million, up 12.4% QoQ from Q4 2024 ($448.3 million) but down 18.0% YoY versus Q1 2024. Gross profit was $171.2 million with a gross margin of 33.96%, marking a material YoY and QoQ shift versus prior periods. Net income totaled $112.3 million, a YoY decline of 27.3% but a QoQ rebound of 117.4% from the Q4 2024 period, aided by improved operating performance and other income dynamics.
- Operating and bottom-line margins remained robust on a per-quarter basis (operating income $119.9 million; net margin 22.3%), yet the quarter displayed a high interest burden (interest expense $292.2 million) and significant leverage considerations, as reflected in an EBIT coverage ratio of 0.41x and a total debt to capitalization of 0.584. Free cash flow generation was strong at $233.1 million, supported by solid operating cash flow of $238.9 million and a cash balance of $692.4 million at period end.
- The balance sheet remains highly leveraged for a mortgage REIT profile, with total debt of $8.00â$8.97 billion implied in the period data and a net debt position of approximately $8.53 billion. Despite this, Starwood generated meaningful free cash flow and maintained a substantial liquidity runway via financing activities totaling a net inflow of $805.5 million in the quarter. The company continues to pay a dividend consistent with REIT requirements, with a payout ratio of about 1.45x based on reported net income, underscoring the typical distribution-centric model of this sector.
- Based on the QQ1 2025 data and available peer benchmarks, Starwood exhibits a balanced but cautious investment profile: a price-to-book around 1.04x and a P/E near 14.9x, with a modest dividend yield of approximately 2.4%. Valuation is mid-pack against listed REIT peers, reflecting the structural leverage and interest-rate sensitivity. Management commentary was not provided in the supplied transcript data; as such, the forward-looking view relies on quantitative indicators and industry context.