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Special Report Starwood Shares Have Struggled, but Catalysts Could Signal a TurnAuthor: Jennifer Ryan Woods. First Published: 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, higher interest rates have 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 originates, acquires and manages commercial mortgage loans and other real estate-related investments—has trended meaningfully lower over the past five years. The past year has been especially challenging, driven by disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings did not fully 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 Pressured Shares SpaceX is already one of the most valuable private companies on Earth, and some analysts believe its valuation could reach over $1.5 trillion. But since SpaceX isn't publicly traded, most investors assume they have no way to invest—that assumption may be wrong. According to veteran investor Matt McCall, there's a little-known public investment vehicle that provides exposure to SpaceX and dozens of other private companies, and today shares trade for less than $30. Click here to see the full story Starwood's struggles began during the COVID-19 pandemic, when 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. Shares rebounded to pre-pandemic levels by mid-2021 as investor confidence returned, but new headwinds quickly emerged. As rates began rising in March 2022, property values declined and lending margins tightened, once again pressuring commercial mortgage REITs. The impact on STWD has been significant: shares are down 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 fell over the same period—roughly 65%, 40% and 27%, respectively. Over the last year Starwood has underperformed the group. The stock has declined about 12% over the past 12 months and, at a recent trading price near $17.37, has been flirting with the 52-week low it hit in April 2025. It has also lagged the broader REIT industry, which is down about 12%, and has been notably weaker than many peers. Over the past 12 months, Ares shares are up roughly 4.75%, Blackstone Mortgage Trust is down about 3.65%, and Apollo Commercial Real Estate Finance is up more than 10%. Inconsistent Earnings and Dividend Coverage Weigh on Sentiment One issue weighing on Starwood is its inconsistent earnings. EPS have beaten expectations in four of the last six quarters, but revenue has missed in five of those six. The company has also reported negative net interest income in some quarters, which has dented sentiment. Starwood has paid a quarterly dividend of 48 cents per share for more than a decade, which currently yields about 11.26%. Over the past four quarters, however, earnings have not fully covered the dividend—resulting in a payout ratio of roughly 165%, a level many investors view as unsustainably high. Against the still-challenging higher-rate backdrop, the combination of mixed earnings and uneven dividend coverage has made some investors cautious. Still, several recent developments could help reignite optimism: better-than-expected revenue, positive company commentary about improving dividend coverage, and an authorized share buyback. Stronger Results and a Potential Buyback Could Shift Sentiment In Starwood's Q4 2025 earnings report, released on 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 several consecutive misses. The company highlighted a stronger balance sheet, having executed $4.4 billion in capital raises and ending the year with $1.4 billion in liquidity. While EPS still did not cover the 48-cent quarterly dividend, management said on the earnings call that it expects dividend coverage to improve steadily through the year. Despite those positives, a continued decline in BVPS remains a concern. Following the earnings 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 equal to as much as 6% of shares outstanding could meaningfully boost earnings per share and support the stock, depending on execution. Wall Street Is Waiting for Clearer Signs of Improvement The market's reaction to the fourth-quarter report and the buyback news was mixed. Shares rose roughly 2% on higher-than-normal volume, though two analysts trimmed their price targets while maintaining 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% upside over the next year. Wall Street may remain in a wait-and-see mode for now, but the outlook could turn more bullish if Starwood delivers another quarter of solid earnings and revenue, improves dividend coverage, and begins actively repurchasing shares. | 
