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Today's Exclusive News
Starwood Shares Have Struggled, but Catalysts Could Signal a TurnAuthored by Jennifer Ryan Woods. Date 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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In recent 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 trended meaningfully lower over the past five years. Last year was particularly challenging: disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings failed to cover the dividend all weighed on the stock. Still, recent developments suggest the tide may be turning, and several catalysts could point to near-term upside. Pandemic Pressure Followed by Rising Rates Pressured Shares
Starwood’s struggles began during the COVID-19 pandemic, when shares plunged in early 2020 from about $26 to below $10 as mortgage REITs faced liquidity concerns and broad uncertainty across commercial real estate. 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 notable: shares are down more than 30% over the past five years. Competitors also suffered—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. More recently, Starwood underperformed the group. The stock is down roughly 12% over the past year and, at about $17.37, has been trading near its 52-week low reached in April 2025. It has also lagged the broader REIT industry, which is down less than 12%. By contrast, over the last 12 months Ares is up ~4.8%, Blackstone Mortgage Trust is down about 3.6% and Apollo Commercial Real Estate Finance is up more than 10%. Inconsistent Earnings and Dividend Coverage Weigh on SentimentStarwood’s earnings have been uneven. While EPS beat estimates in four of the last six quarters, revenue missed in five of those six periods. Misses in net interest income in certain quarters have also dented sentiment. The company’s dividend has added uncertainty. For more than a decade, the REIT has paid a quarterly dividend of $0.48 per share, currently yielding about 11.26%. However, over the past four quarters earnings did not fully cover that payout, producing an unsustainably high payout ratio near 165%. Against a still-challenging higher-rate backdrop, mixed results and uneven dividend coverage have made some investors cautious. Yet several recent developments—better-than-expected revenue, management commentary suggesting improving dividend coverage and a newly authorized share repurchase—could help rebuild 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 estimates by $0.01. Revenue of $492.95 million was roughly $23 million above expectations—the company’s first revenue beat after multiple consecutive misses. Starwood highlighted a stronger liquidity position, noting $4.4 billion in capital raises and year-end liquidity of $1.4 billion. Although EPS still did not cover the $0.48 quarterly dividend, management said on the earnings call that it expects dividend coverage to steadily improve over the year. A continued decline in BVPS, however, remains a concern. After 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 support EPS and the stock if executed. 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, but two analysts lowered their price targets while 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. Wall Street may remain cautious for now, but the outlook could turn more bullish if Starwood posts another quarter of strong revenue and earnings, improves dividend coverage and begins actively repurchasing shares. |
