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Further Reading from MarketBeat
Starwood Shares Have Struggled, but Catalysts Could Signal a TurnReported by Jennifer Ryan Woods. 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 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, recent developments suggest the tide may be turning: better-than-expected revenue, positive commentary on dividend coverage, and an authorized share buyback could signal near-term upside. Pandemic Shock, Then Rising Rates Pressured Shares
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Starwood’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 uncertainty across commercial real estate markets. Shares recovered to pre-pandemic levels by mid-2021, but rising rates from March 2022 led to lower property values and tighter lending margins, again pressuring commercial mortgage REITs. The impact on STWD has been significant: shares are down more than 30% over five years. Competitors also fell over the period—Ares Commercial Real Estate (NYSE: ACRE) about 65%, Blackstone Mortgage Trust (NYSE: BXMT) about 40%, and Apollo Commercial Real Estate Finance (NYSE: ARI) roughly 27%. Over the past year, Starwood has underperformed its peers. The stock has declined roughly 12% and, at a recent price near $17.37, has been approaching its 52-week low from April 2025. It has also lagged the broader REIT industry, which is down less than 12%. By comparison, Ares is up about 4.75% over 12 months, 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 persistent 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. Weaker net interest income in certain quarters has also dented investor confidence. Dividend coverage 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 a payout ratio of roughly 165%, or about 113% when measured against 2025 distributable EPS. Given the higher-rate environment, mixed earnings and uneven dividend coverage have made some investors cautious. Still, several recent developments could help restore confidence: a quarter of better-than-expected revenue, management’s optimistic commentary on dividend coverage, and a newly authorized share repurchase program. Stronger Results and a Potential Buyback Could Shift SentimentIn Starwood’s Q4 2025 earnings report on Feb. 25, the REIT reported EPS of $0.42, beating analyst estimates by $0.01. Revenue of $492.95 million came in about $23 million above estimates, breaking a string of revenue misses. The company said it executed $4.4 billion in capital raises and finished the year with $1.4 billion in liquidity, pointing to a stronger balance sheet. Although EPS still fell short of covering the $0.48 quarterly dividend, management said it expects dividend coverage to improve steadily during the year. BVPS declines remain 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. A buyback that could represent as much as roughly 6% of shares outstanding has the potential to meaningfully bolster earnings per share and support 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 about 2% on higher-than-normal volume, but two analysts lowered their price targets despite maintaining Outperform ratings. At present, four analysts rate the stock a Hold and three rate it a Buy. The average 12-month price target implies nearly 16% upside. While Wall Street may remain cautious for now, the outlook could turn more constructive if Starwood posts another quarter of strong earnings and revenue, improves dividend coverage, and begins actively repurchasing shares. |
