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Starwood Shares Have Struggled, but Catalysts Could Signal a TurnAuthored by Jennifer Ryan Woods. First 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 specializes in originating, acquiring and managing commercial mortgage loans and other real estate-related investments—has seen its stock trend meaningfully lower over the past five years. The last year was particularly challenging, driven by disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings failed to cover the dividend. However, recent developments suggest the tide may be turning: a mix of stronger results, improved liquidity, and a newly authorized buyback could create near-term upside. Pandemic Pressure Followed by Rising RatesStarwood’s troubles 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 uncertainty in commercial real estate markets. Shares recovered to pre-pandemic levels by mid-2021 as investor confidence returned, but new headwinds soon emerged.
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As rates began rising in March 2022, property values declined and lending margins tightened, again pressuring commercial mortgage REITs. The impact on STWD has been significant: shares are down 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 the pinch, falling roughly 65%, 40%, and 27%, respectively, over the same period. Over the last year, Starwood has underperformed its 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 set in April 2025. It has also lagged the broader REIT industry (down less than 12%) and many peers: Ares shares are up about 4.8%, Blackstone Mortgage Trust is down roughly 3.7%, and Apollo Commercial Real Estate Finance is up more than 10% over the past year. Inconsistent Earnings and Dividend Coverage Weigh on SentimentOne persistent issue for Starwood has been inconsistent results. While earnings per share (EPS) have beaten expectations in four of the last six quarters, revenue missed estimates in five of those six quarters. The company has also reported weaker net interest income in certain periods, which has dampened investor sentiment. Starwood’s 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, earnings have not fully covered the dividend over the past four quarters, resulting in a payout ratio of roughly 165% (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. Still, several recent developments could help restore confidence: better-than-expected revenue, constructive company commentary on dividend coverage, and an authorized share repurchase program. 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, marking a break from several consecutive revenue misses. The company highlighted a stronger balance sheet after executing $4.4 billion in capital raises and ending the year with $1.4 billion in liquidity. While EPS still did not cover the $0.48 quarterly dividend, management said on the earnings call it expects dividend coverage to improve steadily during the year. A continued decline in BVPS, however, remains a concern. Following 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 up to about 6% of shares outstanding could meaningfully boost per-share metrics and provide support for the stock, depending on execution. Wall Street Is Waiting for Clearer Signs of ImprovementMarket reaction to the Q4 report and the buyback announcement was mixed. Shares rose roughly 2% on higher-than-normal volume, though two analysts lowered their price targets while both maintained 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 for now, but the outlook could improve if Starwood delivers another quarter of strong earnings and revenue, visibly improves dividend coverage, and begins executing the repurchase program. |
