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Special Report
Starwood Shares Have Struggled, but Catalysts Could Signal a TurnAuthor: Jennifer Ryan Woods. Article 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 last five years. The past year has been difficult for the company, driven by disappointing revenue, declines in book value per share (BVPS), and several quarters in which earnings did not fully cover the dividend. Still, a mix of recent developments suggests the tide may be turning and could create near-term upside. Pandemic Pressure Followed by Rising Rates
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Starwood’s struggles began during the COVID-19 pandemic, when 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. Shares rebounded to pre-pandemic levels by mid-2021 as investor confidence returned, but new headwinds emerged when interest rates began rising in March 2022. Higher rates weighed on property values and compressed lending margins, putting renewed pressure on 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 peers. The stock has declined roughly 12% over the past 12 months and, at a recent trading price near $17.37, has been trading close to the 52-week low reached in April 2025. The stock has lagged the broader REIT industry, which is down less than 12%, and has been weaker than many peers. Over the past 12 months, Ares shares are 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 CoverageOne factor weighing on Starwood is its inconsistent earnings. While earnings per share (EPS) beat expectations in four of the last six quarters, revenue missed estimates in five of those six. The company has also reported negative net interest income in certain quarters, which has hurt investor sentiment. Starwood’s dividend has added to 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 have not fully covered that payout, implying a payout ratio of roughly 165%. Against the still-challenging higher-rate backdrop, mixed results and uneven dividend coverage have made some investors cautious. Still, several recent developments—stronger revenue, management commentary on improving dividend coverage, and a newly authorized share repurchase program—could help restore confidence. Stronger Results and a Potential BuybackIn 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 the first revenue beat after several consecutive misses. Starwood highlighted a stronger balance sheet, noting it executed $4.4 billion in capital raises and ended 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 that it expects dividend coverage to improve steadily during the year. A continued decline in BVPS, however, remains a concern. Following the earnings release, the company’s board authorized the repurchase of up to $400 million of its outstanding common stock and convertible notes over the next 12 months using existing cash. A buyback equal to as much as about 6% of shares outstanding could meaningfully boost per-share metrics and provide support for the stock, depending on execution. Wall Street Is Watching for Clearer SignsMarket reaction to the Q4 report and buyback announcement was mixed. Shares rose roughly 2% on higher-than-normal volume, though 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 until Starwood delivers another quarter of stronger earnings and revenue, improves dividend coverage, and begins executing meaningful share repurchases. If management delivers on those fronts, sentiment could shift more decisively in the stock’s favor. |
