Starwood Properties swings to profit in 3Q

Starwood Properties (STWD) earned $22.7 million in net income in the third quarter, or 47 cents a share, swinging to a profit after a $1.9 million loss, or 4 cents a share, in the year-ago quarter. During the quarter, the company added a 10-person team to build an originations platform. “We are setting the stage for our second chapter in which we will build a robust originations platform in our quest to become a multi-faceted commercial finance company,” said Barry Sternlicht, chairman and CEO. 3Q results included a gain of $9.3 million, or 19 cents per share, related to the company’s participation in a commercial mortgage securitization. Net interest margin in the third quarter generated from investments was $22.8 million, up from $18 million in the second quarter of 2010. The current pipeline of opportunities exceeds $1 billion, Sternlicht said. As of Sept. 30, Starwood Properties’ total investments were $1.25 billion. The company completed approximately $272 million of new investments subsequent to June 30. Of that, $203 million closed in the third quarter. One of the biggest acquisitions during the quarter was a $68.6 million subordinated first mortgage loan with a face value of $85 million, secured by a regional mall in suburban Columbus, Ohio, which has an expected unlevered return of 12%. Starwood also acquired $52 million in mortgage-backed securities and REIT bonds. The company’s RMBS investments are used as an alternative to its available cash while it identifies appropriate investments. For the first nine months of the year, Starwood earned $39.5 million, or 81 cents a share. Write to Kerry Curry. The author holds no relevant investments.