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This Month's Featured Story Starwood Shares Have Struggled, but Catalysts Could Signal a TurnWritten by Jennifer Ryan Woods. Originally 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.
- Special Report: Elon Musk: This Could Turn $100 into $100,000
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 originates, acquires and manages commercial mortgage loans and other real estate-related investments—has seen its stock decline materially over the last five years. The past year has been particularly challenging, driven by disappointing revenue, a decline in book value per share (BVPS), and several quarters in which earnings failed to cover the dividend. Still, recent developments suggest the tide may be turning: better revenue, positive commentary on dividend coverage and a newly authorized share buyback could point to near-term upside. Pandemic Pressure Followed by Rising Rates Pressured Shares Brand-new data centers in Silicon Valley are finished, wired, and loaded with hardware - but they can't turn on. The grid equipment needed to connect them doesn't exist yet, and the waitlist runs past 2028. With $969 billion in AI spending in motion, this infrastructure bottleneck is already pressuring timelines. One company is positioned to solve it - and a June IPO could force a repricing before most investors take notice. See the full story on the company solving the AI power crisis Starwood's struggles began during the COVID-19 pandemic, when shares plunged in early 2020, falling from roughly $26 to below $10 amid liquidity concerns and uncertainty across commercial real estate markets. Shares rebounded to pre-pandemic levels by mid-2021 as investor confidence returned, but a new headwind emerged when rates began rising in March 2022. Higher rates depressed property values and compressed lending margins, once again putting pressure on commercial mortgage REITs. The impact on STWD has been significant: shares are down more than 30% over the past five years. Competitors were also hit—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 underperformed the group. The stock is down about 12% over the last 12 months and, at a recent price near $17.37, has been hovering close to the 52-week low hit in April 2025. It has also lagged the broader REIT industry, which is down less than 12%. By comparison, Ares shares have risen roughly 4.8%, Blackstone Mortgage Trust is down about 3.7%, and Apollo Commercial Real Estate Finance is up more than 10% over the same period. Inconsistent Earnings and Dividend Coverage Weigh on Sentiment One concern has been inconsistent earnings. Earnings per share (EPS) beat estimates in four of the last six quarters, but revenue missed in five of those six. The company has also reported negative net interest income in some quarters, which has dented sentiment. Starwood's dividend has added to investor uncertainty. For more than a decade the REIT has maintained a quarterly dividend of $0.48 per share, which currently yields about 11.3%. However, over the past four quarters earnings did not fully cover the dividend, producing an unsustainable payout ratio of roughly 165%. Against a still-challenging higher-rate backdrop, the combination of mixed earnings and uneven dividend coverage has made investors cautious. That said, several recent developments could help rekindle optimism: better-than-expected revenue, management's positive comments about improving dividend coverage, and an authorized share repurchase program. Stronger Results and a Potential Buyback Could Shift Sentiment In Starwood's Q4 2025 earnings report, released Feb. 25, the REIT reported EPS of $0.42, beating analyst estimates by a penny. Revenue of $492.95 million came in about $23 million above estimates, marking an improvement after multiple consecutive revenue misses. Starwood also highlighted a stronger balance sheet: it executed $4.4 billion in capital raises and ended 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 through the year. Still, a continued decline in BVPS remains a concern. Following the earnings release, the company announced its 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 EPS and support the stock, depending on execution and timing. Wall Street Is Waiting for Clearer Signs of Improvement Market reaction to the fourth-quarter results and the buyback was mixed. Shares rose about 2% on above-average volume, though two analysts lowered their price targets—both kept 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 for now, but sentiment could turn more bullish if Starwood delivers another quarter of solid earnings and revenue, improves dividend coverage, and begins actively repurchasing shares. | 