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Exclusive Story Starwood Shares Have Struggled, but Catalysts Could Signal a TurnWritten by Jennifer Ryan Woods. Article Posted: 3/31/2026. 
Key Points - Starwood Property Trust has been under pressure from rising interest rates and company-specific challenges, with the stock down more than 30% over the past five years and lagging its peers over the last year.
- Inconsistent earnings, repeated revenue misses, and uneven dividend coverage have weighed on investor sentiment, even as the company has maintained its high dividend payout.
- Recent developments, including a stronger earnings report, improving commentary around dividend coverage, and a newly authorized share buyback, could help shift sentiment if the company delivers more consistent results.
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Over the last several years, the higher interest rate environment has been a persistent headwind for commercial real estate, and Starwood Property Trust (NYSE: STWD) has been no exception. The real estate investment trust (REIT)—which specializes in originating, acquiring, and managing commercial mortgage loans and other real estate-related investments—has seen its stock trend meaningfully lower over the last five years. The past year has been challenging, driven by disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings failed to cover the dividend. However, the tide may be turning: a mix of recent developments could signal near-term upside. Pandemic Pressure Followed by Rising Rates "What's happening in NYC will spread..." Last year I ran for Mayor of New York City... and lost to a 34-year-old Democratic Socialist. Now he wants to spend $70 million just to study government-run grocery stores. Raise property taxes 9.5%. And hike taxes on every corporation and high earner. I've spent 30 years on Wall Street. And I'm convinced what's starting in New York is just the beginning. I've put together a free analysis explaining exactly what's coming, and what you can do about it. Read it here. Starwood's struggles began during the COVID-19 pandemic. Shares plunged in early 2020, falling from around $26 to below $10 as mortgage REITs faced liquidity concerns and broad uncertainty in commercial real estate markets. While the stock rebounded to pre-pandemic levels by mid-2021, rising rates starting in March 2022 eroded property values and tightened lending margins, again pressuring commercial mortgage REITs. The impact on STWD stock has been significant, with shares falling more than 30% over the past five years. Competitors such as Ares Commercial Real Estate (NYSE: ACRE), Blackstone Mortgage Trust (NYSE: BXMT), and Apollo Commercial Real Estate Finance (NYSE: ARI) also suffered, dropping roughly 65%, 40%, and 27%, respectively, over the same period. Over the last year, Starwood underperformed the group. The stock has declined about 12% and, at a recent trading price near $17.37, has flirted with the 52-week low hit in April 2025. The stock has also lagged the broader REIT industry, which is down roughly 12%, and has been weaker than many peers. Over the past 12 months, Ares shares have risen about 4.8%, Blackstone Mortgage Trust is down roughly 3.7%, and Apollo Commercial Real Estate Finance is up more than 10%. Inconsistent Earnings and Dividend Coverage One persistent issue for Starwood has been inconsistent results. While earnings per share (EPS) have beaten expectations in four of the last six quarters, revenue missed in five of those six quarters. The company also reported negative net interest income in some quarters, which hurt sentiment. Starwood's dividend has added uncertainty. For more than a decade the REIT has paid a quarterly dividend of $0.48 per share, which currently yields about 11.26%. However, over the past four quarters earnings did not fully cover the dividend, producing an unsustainable payout ratio near 165%. Against a still-challenging higher-rate backdrop, mixed earnings and uneven dividend coverage have made investors cautious. Yet several recent developments could restore confidence: better-than-expected revenue, management's positive commentary about dividend coverage, and a newly authorized share buyback. Stronger Results and a Potential Buyback In Starwood's Q4 2025 earnings report (Feb. 25), the REIT reported EPS of $0.42, beating analyst estimates by $0.01. Revenue of $492.95 million came in roughly $23 million above estimates—the first revenue beat after multiple consecutive misses. The company said it has strengthened its balance sheet, executing $4.4 billion in capital raises and ending the year with $1.4 billion in liquidity. While EPS still did not cover the $0.48 quarterly dividend, management said on the earnings call it expects dividend coverage to improve steadily during the year. Declining BVPS, however, remains a concern. Following the release, the board authorized the repurchase of up to $400 million of common stock and convertible notes over the next 12 months using existing cash. A buyback representing up to roughly 6% of shares outstanding could meaningfully support earnings per share and the stock price if executed. Wall Street Is Waiting for Clearer Signs Market reaction to the Q4 report and buyback announcement was mixed. Shares rose about 2% on higher-than-normal volume, although two analysts lowered their price targets while keeping Outperform ratings. Currently, four analysts rate the stock a Hold and three rate it a Buy. The average 12-month price target implies nearly 16% potential upside. Wall Street may remain cautious for now, but the outlook could turn more favorable if Starwood delivers another quarter of solid earnings and revenue, improves dividend coverage, and begins to repurchase shares actively. | 
