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Further 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, 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 declined significantly over the past five years. The past year was especially challenging, driven by disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings failed to cover the dividend. However, 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 struggles began during the COVID-19 pandemic. Shares plunged in early 2020, falling from around $26 to below $10 as mortgage REITs were hit by liquidity concerns and uncertainty across commercial real estate markets. While shares rebounded to pre-pandemic levels by mid-2021 as investor confidence returned, rising rates from March 2022 onward drove property values lower and tightened lending margins, once again pressuring commercial mortgage REITs.
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The impact on STWD has been significant, with shares falling 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 felt pressure, falling 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% over the past 12 months and, at a recent price near $17.37, has been flirting with the 52-week low it hit in April 2025. Starwood has also lagged the broader REIT industry, which is down less than 12%, and trailed many peers. Over the past 12 months, Ares shares have risen 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 persistent issue for Starwood has been inconsistent earnings. While earnings per share (EPS) beat expectations in four of the last six quarters, revenue missed estimates in five of those six periods. The company has also reported weaker net interest income in some quarters, which has weighed on investor sentiment. Starwood’s dividend has added to uncertainty. 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 have not fully covered the dividend, resulting in a payout ratio near 165%, or about 113% based on 2025 distributable EPS. Against the still-challenging higher-rate backdrop, mixed earnings and uneven dividend coverage have made some investors cautious. Several recent developments, though—better-than-expected revenue, positive commentary about dividend coverage, and an authorized share buyback—could help reignite optimism. Stronger Results and a Potential Buyback Could Shift SentimentIn 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, a welcome break after multiple consecutive revenue misses. Starwood also 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 fell short of covering the $0.48 quarterly dividend, management said on the earnings call that it expects dividend coverage to improve steadily throughout the year. Nonetheless, a continued decline in BVPS remains a concern. Following the earnings release, the board authorized a repurchase of up to $400 million of common stock and convertible notes over the next 12 months using existing cash. A buyback of up to about 6% of shares outstanding could meaningfully boost EPS and help support the stock, though execution will be important. Wall Street Is Waiting for Clearer Signs of ImprovementThe market reaction to the quarter and the buyback was mixed. Shares rose roughly 2% on higher-than-normal volume, even as two analysts lowered 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 cautious 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. |
