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Exclusive Content
Starwood Shares Have Struggled, but Catalysts Could Signal a TurnReported 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 originates, acquires, and manages commercial mortgage loans and other real estate-related investments—has seen its stock trend meaningfully lower over the past five years. The past year was particularly challenging, with disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings failed to cover the dividend. Still, recent developments could signal a near-term turnaround. Pandemic Pressure Followed by Rising Rates Pressured SharesStarwood’s troubles began during the COVID-19 pandemic, when shares plunged in early 2020 from around $26 to below $10 as mortgage REITs faced liquidity concerns and widespread uncertainty in commercial real estate markets. Shares rebounded to pre-pandemic levels by mid-2021 as investor confidence returned, but new headwinds emerged when rates began rising in March 2022, causing property values to decline and lending margins to tighten.
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The impact on STWD has been significant: shares are down more than 30% over the past five years. Peers felt similar pressure—Ares Commercial Real Estate (NYSE: ACRE), Blackstone Mortgage Trust (NYSE: BXMT), and Apollo Commercial Real Estate Finance (NYSE: ARI) dropped roughly 65%, 40%, and 27%, respectively, over the same period. Over the last year, Starwood has underperformed the group. The stock is down about 12% over the past 12 months and, at a recent trading price near $17.37, has been flirting with the 52-week low hit in April 2025. Starwood has also lagged the broader REIT industry, which is down less than 12%, and has underperformed several close peers. Over the past year, Ares shares are up roughly 4.8%, Blackstone Mortgage Trust is down about 3.7%, and Apollo Commercial Real Estate Finance is up more than 10%. Inconsistent Earnings and Dividend Coverage Weigh on SentimentOne persistent issue for Starwood has been inconsistent earnings. While earnings per share (EPS) beat estimates in four of the last six quarters, revenue missed in five of those six periods. Weaker net interest income in some quarters has further weighed on investor sentiment. The company's dividend has also raised concerns. For more than a decade, the REIT has maintained its quarterly dividend of $0.48 per share, currently yielding about 11.26%. However, over the past four quarters, earnings did not fully cover that dividend—resulting in a payout ratio near 165%, or roughly 113% based on 2025 distributable EPS. Against a still-challenging higher-rate backdrop, mixed earnings and uneven dividend coverage have made some investors cautious. Yet several recent developments could rekindle optimism: better-than-expected revenue, positive commentary from management about improving dividend coverage, and a newly authorized share repurchase program. Stronger Results and a Potential Buyback Could Shift SentimentIn Starwood’s Q4 2025 earnings report, released Feb. 25, the REIT reported EPS of $0.42, beating analyst estimates by $0.01. Revenue of $492.95 million topped estimates by roughly $23 million, marking a departure from multiple consecutive revenue misses. Starwood highlighted a stronger balance sheet, noting it executed $4.4 billion in capital raises and finished the year with $1.4 billion in liquidity. While EPS did not cover the $0.48 quarterly dividend, management said on the earnings call that it expects dividend coverage to steadily improve throughout the year. Still, a continuing 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 EPS and provide support for the stock, depending on execution. Wall Street Is Waiting for Clearer Signs of ImprovementMarket reaction to the Q4 results and the buyback was mixed. Shares rose roughly 2% on higher-than-normal volume, yet two analysts trimmed their price targets even as they maintained 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. Wall Street may remain cautious for now, but the outlook could turn more positive if Starwood delivers another quarter of strong revenue and earnings, improves dividend coverage, and begins actively repurchasing shares. |
