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This Week's Bonus Story
Starwood Shares Have Struggled, but Catalysts Could Signal a TurnAuthor: 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 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, the tide may be turning: a mix of recent developments could point to near-term upside. 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 broad uncertainty across commercial real estate markets. Shares recovered to pre-pandemic levels by mid-2021, but new headwinds emerged when interest rates began rising in March 2022, putting downward pressure on property values and compressing lending margins.
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The impact on STWD has been substantial: shares are down more than 30% over the past five years. Peers felt the pain as well—Ares Commercial Real Estate (NYSE: ACRE), Blackstone Mortgage Trust (NYSE: BXMT), and Apollo Commercial Real Estate Finance (NYSE: ARI) have fallen roughly 65%, 40%, and 27%, respectively, over the same period. Over the last year, Starwood has underperformed the group. The stock is down roughly 12% year‑over‑year and, trading around $17.37, has been flirting with the 52-week low set in April 2025. Starwood has also lagged the broader REIT industry, which is down less than 12%. By contrast, some peers have fared better over the past 12 months: Ares is up about 4.75%, Blackstone Mortgage Trust is down roughly 3.65%, and Apollo Commercial Real Estate Finance is up more than 10%. Inconsistent Earnings and Dividend Coverage Weigh on SentimentOne ongoing challenge for Starwood has been inconsistent fundamentals. While earnings per share (EPS) beat expectations in four of the last six quarters, revenue missed estimates in five of those six quarters, and net interest income has been uneven—factors that have weighed on investor sentiment. The dividend has added to investor uncertainty. For more than a decade, the REIT has paid a quarterly dividend of 48 cents per share, which currently yields about 11.26%. However, over the past four quarters earnings did not fully cover the dividend, producing a payout ratio of roughly 165% (about 113% when measured against 2025 distributable EPS). Against a still-challenging higher-rate backdrop, mixed earnings and uneven dividend coverage have made some investors cautious. That said, several recent developments may help rekindle confidence: better-than-expected revenue after a string of misses, encouraging company commentary on dividend coverage, and a newly authorized share buyback. 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 was roughly $23 million above consensus—marking an improvement after several consecutive revenue misses. Starwood also highlighted balance-sheet progress: it executed $4.4 billion in capital raises and finished the year with about $1.4 billion in liquidity. Although EPS did not cover the 48-cent quarterly dividend in that quarter, management said it expects dividend coverage to improve steadily during the year. Still, the continued decline in BVPS remains a concern for investors. After the earnings release, the board authorized the repurchase of up to $400 million of outstanding common stock and convertible notes over the next 12 months using existing cash. A buyback representing as much as roughly 6% of shares outstanding could meaningfully support EPS and the share price if it is executed at scale. Wall Street Is Waiting for Clearer Signs of ImprovementMarket reaction to the Q4 results and buyback was mixed. Shares rose about 2% on higher-than-normal volume after the announcements, but two analysts lowered their price targets even as they maintained Outperform ratings. Analyst sentiment is split: four 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 cautiously optimistic until Starwood delivers clearer proof points—another quarter of strong earnings and revenue, improved dividend coverage, and tangible buyback activity. If management can show progress on those fronts, the outlook could become more constructive in the near term. |
