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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 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 failed to cover its dividend. Still, recent developments suggest the tide may be turning and could create 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 from around $26 to below $10 as mortgage REITs faced liquidity concerns and broad uncertainty across commercial real estate markets. Shares recovered to pre-pandemic levels by mid-2021 as investor confidence returned, but new headwinds emerged soon after. As interest rates rose beginning in March 2022, property values declined and lending margins tightened, once again pressuring 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. Competitors 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 last year, Starwood has underperformed the group. The stock is down roughly 12% year over year and, at a recent price around $17.37, has been trading near the 52-week low it hit in April 2025. The stock has also lagged the broader REIT industry, which is down less than 12% over the past 12 months, and has been notably weaker than many peers. Over the same period, 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 Coverage Weigh on SentimentOne persistent problem for Starwood has been inconsistent results. While earnings per share (EPS) beat expectations in four of the last six quarters, revenue missed estimates in five of those six reporting periods. The company has also reported weaker net interest income in certain quarters, which has weighed on investor sentiment. Starwood’s dividend has added uncertainty. For more than a decade, the REIT has paid a quarterly dividend of $0.48 per share, which currently yields about 11.26%. Over the past four quarters, earnings did not fully cover that payout, producing 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 investors cautious. Several recent developments, however, could help restore confidence: better-than-expected revenue, management’s positive commentary about improving dividend coverage, and a newly authorized share repurchase program. 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 roughly $23 million above forecasts, the first revenue beat after several consecutive misses. Management 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, the company said on the earnings call that it expects dividend coverage to improve steadily through the year. Despite these positives, book value per share continued to decline and remains a concern. Following the earnings release, Starwood’s 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 roughly 6% of shares outstanding could meaningfully boost earnings per share and provide support for the stock, depending on execution. Wall Street Is Waiting for Clearer Signs of ImprovementMarket reaction to the fourth-quarter report and the buyback announcement was mixed. Shares rose roughly 2% on higher-than-normal volume, but two analysts trimmed their price targets even as they 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 in a wait-and-see mode for now, but the outlook could turn more bullish if Starwood delivers another quarter of strong earnings and revenue, improves dividend coverage, and begins actively repurchasing shares. |
