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Additional Reading from MarketBeat
Starwood Shares Have Struggled, but Catalysts Could Signal a TurnWritten by Jennifer Ryan Woods. Originally 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, 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 last five years. The past year has been particularly challenging, driven by disappointing revenue, declines in book value per share (BVPS) and several quarters in which earnings failed to cover the dividend. Still, a mix of recent developments could point to near-term upside. Pandemic Pressure Followed by Rising Rates Pressured SharesStarwood’s struggles began during the COVID-19 pandemic, when shares plunged in early 2020 from around $26 to below $10 as mortgage REITs were hit by liquidity concerns and broad uncertainty in commercial real estate. Shares rebounded to pre-pandemic levels by mid-2021, but new headwinds emerged as interest rates climbed. When rates began rising in March 2022, property values declined and lending margins tightened, once again putting pressure on commercial mortgage REITs.
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The impact on STWD has been significant: shares are down more than 30% over the past five years. Competitors felt similar pressure—Ares Commercial Real Estate (NYSE: ACRE), Blackstone Mortgage Trust (NYSE: BXMT) and Apollo Commercial Real Estate Finance (NYSE: ARI) fell roughly 65%, 40% and 27%, respectively, over the same period. Over the last year, Starwood has underperformed its peers. The stock has declined roughly 12% over the past 12 months and was recently trading around $17.37, close to the 52-week low it hit in April 2025. The broader REIT industry is down less than 12% over that period, and several peers have fared better—Ares is up about 4.75%, Apollo Commercial is up more than 10%, and Blackstone Mortgage Trust is down roughly 3.65%. Inconsistent Earnings and Dividend Coverage Weigh on SentimentOne recurring issue for Starwood has been inconsistent results. While earnings per share (EPS) beat expectations in four of the last six quarters, revenue missed in five of those six periods. The company has also reported weaker net interest income in certain quarters, which has dented 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%. But earnings have not fully covered the dividend over the past four quarters, producing a payout ratio near 165% (about 113% based on 2025 distributable EPS). Against the still-challenging higher-rate backdrop, this mix of mixed earnings and uneven dividend coverage has made some investors cautious. Still, several recent developments—better-than-expected revenue, management commentary about improving dividend coverage and a newly authorized share buyback—could help restore confidence. 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 came in roughly $23 million above expectations—the first revenue beat after several consecutive misses. Management highlighted a stronger balance sheet, noting $4.4 billion in capital raises during the year and $1.4 billion in year-end liquidity. While EPS still fell short of covering the $0.48 quarterly dividend, the company said on the earnings call it expects dividend coverage to improve steadily through the year. A continued decline in BVPS remains a concern, however. After the earnings release, Starwood’s board authorized the repurchase of up to $400 million of outstanding common stock and convertible notes over the next 12 months using existing cash. That repurchase could represent as much as roughly 6% of shares outstanding and, if executed, would likely be accretive to EPS and could support the share price. Wall Street Is Waiting for Clearer Signs of ImprovementThe market reaction to the fourth-quarter report and the buyback authorization was mixed. Shares rose about 2% on higher-than-normal volume after the announcements, 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 from current levels. Wall Street may remain cautious until Starwood delivers more consistent quarters of stronger revenue and earnings, demonstrates improving dividend coverage and begins executing the buyback. If those catalysts materialize, investor sentiment could shift more noticeably in the near term. |
