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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.
- Special Report: Elon Musk: This Could Turn $100 into $100,000
In recent 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 last 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, 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, when shares plunged in early 2020, falling from around $26 to below $10 as mortgage REITs were hit by liquidity concerns and broad uncertainty in commercial real estate markets. Shares rebounded to pre-pandemic levels by mid-2021 as investor confidence returned, but new headwinds emerged when rates started rising in March 2022. Property values declined and lending margins tightened, once again putting pressure on commercial mortgage REITs.
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The impact on STWD has been significant: shares are down more than 30% over the past five years. Starwood was not alone—peers such as 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. Over the past year, Starwood has underperformed the group. The stock is down roughly 12% over the last 12 months and, at a recent trading price near $17.37, has been flirting with the 52-week low hit in April 2025. Starwood has also lagged the broader REIT industry, which is down less than 12%. By comparison, Ares shares are up about 4.75% over the past year, 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) have beaten expectations in four of the last six quarters, revenue missed in five of those six periods. The company has also reported weaker net interest income in some quarters, which has hurt sentiment. Starwood’s dividend has added to investor caution. The REIT has maintained a quarterly dividend of 48 cents per share for more than a decade, which currently yields about 11.26%. However, earnings did not fully cover the dividend over the past four quarters, producing a payout ratio near 165% (about 113% based on 2025 distributable EPS). Against the high-rate backdrop, mixed earnings and uneven dividend coverage have kept some investors on the sidelines. Still, several recent developments—better-than-expected revenue, positive commentary from management on dividend coverage, and an authorized share repurchase—could help restore 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 analyst estimates by $0.01. Revenue of $492.95 million came in about $23 million above estimates, marking an improvement after several consecutive revenue misses. Starwood highlighted a stronger balance sheet, having raised $4.4 billion in capital and ending the year with $1.4 billion in liquidity. While EPS 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. Despite these positives, a continued decline in BVPS remains a concern. Following 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 representing as much as roughly 6% of outstanding shares could meaningfully boost EPS and provide support for the stock, depending on execution. Wall Street Is Waiting for Clearer Signs of ImprovementMarket reaction to the quarter and the buyback authorization was muted. Shares rose about 2% on higher-than-normal volume, but two analysts lowered their price targets while still maintaining Outperform ratings on the stock. Consensus analyst sentiment remains mixed: 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 in a wait-and-see mode for now, but the outlook could turn more constructive if Starwood posts another quarter of solid earnings and revenue, improves dividend coverage, and begins to execute the buyback program. |
