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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-34436
 Starwood Property Trust, Inc.
  Maryland
    
    27-0247747(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)591 West Putnam AvenueGreenwich, Connecticut
    
    06830(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants phone number, including area code (203) 422-8100
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.01 par value per share
    
    New York Stock Exchange
 None
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if smaller reporting company)
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS
 PagePart IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    10Item 1B. Unresolved Staff Comments
    
    
    43Item 2. Properties
    
    
    44Item 3. Legal Proceedings
    
    
    44Item 4. Reserved
    
    
    44Part IIItem 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    45Item 6. Selected Financial Data
    
    
    47Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    47Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    58Item 8. Financial Statements and Supplementary Data
    
    
    61Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    77Item 9A. Controls and Procedures
    
    
    77Item 9B. Other Information
    
    
    77Part IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    78Item 11. Executive Compensation
    
    
    78Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    78Item 13. Certain Relationships and Related Transactions, and
Director Independence
    
    
    78Item 14. Principal Accountant Fees and Services
    
    
    78Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    79Signatures
    
    
    81Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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Special Note Regarding Forward Looking Statements
   
    
    factors described in this Annual Report on Form 10-K, including those set forth
under the captions Risk Factors and Business;
 
    
    defaults by borrowers in paying debt service on outstanding items;
 
    
    impairment in the value of real estate property securing our loans;
 
    
    availability of mortgage origination opportunities acceptable to us;
 
    
    national and local economic and business conditions;
 
    
    general and local commercial real estate property conditions;
 
    
    changes in federal government policies;
 
    
    changes in federal, state and local governmental laws and regulations;
 
    
    increased competition from entities engaged in mortgage lending;
 
    
    changes in interest rates; and
 
    
    the availability of and costs associated with sources of liquidity.




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PART I
 
 Item 1. Business.
 The following description of the business should be read in conjunction with the information
included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2009. This
description contains forward-looking statements that involve risks and uncertainties. Actual
results could differ significantly from the results discussed in the forward-looking statements due
to the factors set forth in Risk Factors and elsewhere in this Annual Report on Form 10-K .
References in this Annual Report on Form 10-K to we, our, us, or the Company, refer to
Starwood Property Trust, Inc.
 General
      Investment Strategy
  
    
    seeking to take advantage of pricing dislocations created by distressed sellers or
distressed capital structures and pursuing investments with attractive risk-reward
profiles;
 
    
    focusing on acquiring debt positions with implied basis at deep discounts to replacement
costs;
  1




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
    
    focusing on supply and demand fundamentals and pursuing investments in high population
and job growth markets where demand for all real estate asset classes is most likely to be
present;
 
    
    targeting markets with barriers to entry other than capital; and
 
    
    structuring transactions with an amount of leverage that reflects the risk of the
underlying assets cash flow stream, attempting to match the rate and duration of the
financing with the underlying assets cash flow, and hedging speculative characteristics.
  Financing Strategy
  
    
    sources of private financing, including long- and short-term repurchase agreements and
warehouse and bank credit facilities;
 
    
    securitizations;
 
    
    non-recourse loans provided under the U.S. Governments Term Asset-Backed Securities
Loan Facility (the TALF), for the acquisition of CMBS; and
 
    
    public offerings of our equity or debt securities.
  Our Target Assets
   2




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
    
    whole mortgage loans: loans secured by a first mortgage lien on a commercial
property which provide long-term mortgage financing to commercial property developers or
owners generally having maturity dates ranging from three to ten years;
 
    
    bridge loans: whole mortgage loans secured by a first mortgage lien on a
commercial property which provide interim or bridge financing to borrowers seeking
short-term capital typically for the acquisition of real estate;
 
    
    B-Notes: typically a privately negotiated loan that is secured by a first
mortgage on a single large commercial property or group of related properties and
subordinated to an A Note secured by the same first mortgage on the same property or group;
 
    
    mezzanine loans: loans made to commercial property owners that are secured by
pledges of the borrowers ownership interests in the property and/or the property owner,
subordinate to whole mortgage loans secured by first or second mortgage liens on the
property and senior to the borrowers equity in the property;
 
    
    construction or rehabilitation loans: mortgage loans and mezzanine loans to
finance the cost of construction or rehabilitation of a commercial property;
    
    CMBS: securities which are collateralized by commercial mortgage loans, including:
 
    
    senior and subordinated investment grade CMBS,
    
    below investment grade CMBS, and
    
    unrated CMBS;
 
    
    corporate bank debt: term loans and revolving credit facilities of commercial
real estate operating or finance companies, each of which are generally secured by the
Companys assets;
 
    
    corporate bonds: debt securities issued by commercial real estate operating or
finance companies which may or may not be secured by the Companys assets, including:
 
    
    investment grade corporate bonds,
    
    below investment grade corporate bonds, and
    
    unrated corporate bonds.
  
    
    residential mortgage loans: loans secured by a first mortgage lien on a
residential property;
 
    
    RMBS: securities collateralized by residential mortgage loans, including:
 
    
    Agency RMBS: RMBS for which a U.S. Government agency or a
federally chartered corporation guarantees payments of principal and interest on
the securities, and
 
    
    Non-Agency RMBS: RMBS that are not guaranteed by any U.S.
Government agency or federally chartered corporation.
  3




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Our Portfolio
  WeightedWeighted
    
    AverageCarrying
    
    
    Face
    
    
    Average
    
    LifeInvestment
    
    Value
    
    
    Amount
    
    
    Coupon
    
    (years)Fixed Rate
    
    $
    449,353
    
    
    $
    498,445
    
    
    7.15%
    
    
    4.5Variable Rate
    
    
    11,064
    
    
    
    12,950
    
    
    LIBOR+1.44 %
    
    
    2.2Total Investments
    
    $
    460,417
    
    
    $
    511,395
 Collateral Property Type
    
    
    
    
    
    Geographic LocationHospitality
    
    
    32.7
    %
    
    Northeast
    
    
    14.1
    %Industrial
    
    
    26.5
    %
    
    Mid-Atlantic
    
    
    14.8
    %Office
    
    
    18.0
    %
    
    Southeast
    
    
    35.9
    %Retail
    
    
    16.2
    %
    
    Southwest
    
    
    5.3
    %Multifamily
    
    
    5.1
    %
    
    Midwest
    
    
    8.7
    %Other
    
    
    1.2
    %
    
    West
    
    
    17.2
    %Mixed Use
    
    
    0.3
    %
    
    Other
    
    
    4.0
    %100.0
    %
    
    
    
    
    100.0
    %
  Investment Activities
  Property
    
    
    
    
    
    Face
    
    
    
    
    
    
    
    
    
    
    NetInvestment
    
    Type
    
    Book Value
    
    
    Amount
    
    
    % Owned
    
    
    Financing
    
    
    Investment
    
    
    Rating
    
    VintageMulti-Asset CMBS
    
    Assorted
    
    $
    202,646
    
    
    $
    202,699
    
    
    
    75
    %
    
    $
    171,394
    
    
    $
    31,252
    
    
    AAA
    
    2006-2007Single-Borrower CMBS
    
    Hospitality
    
    
    43,250
    
    
    
    53,712
    
    
    
    100
    %
    
    
    
    
    
    
    43,250
    
    
    BB+
    
    2001-2006Loan Originations
    
    Assorted
    
    
    104,702
    
    
    
    107,722
    
    
    
    100
    %
    
    
    
    
    
    
    104,702
    
    
    N/A
    
    2009Loan Acquisitions
    
    Industrial
    
    
    109,819
    
    
    
    147,262
    
    
    
    100
    %
    
    
    
    
    
    
    109,819
    
    
    N/A
    
    1999$
    460,417
    
    
    $
    511,395
    
    
    
    
    
    
    $
    171,394
    
    
    $
    289,023
    4




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TALF Financed CMBS
      Single-Borrower Commercial Mortgage-Backed Securities
   5




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Loans
  WeightedWeighted
    
    
    AverageBook
    
    
    Face
    
    
    Average
    
    
    LifeInvestment
    
    Value
    
    
    Amount
    
    
    Coupon
    
    
    (years)First Mortgages
    
    $
    182,829
    
    
    $
    212,424
    
    
    
    8.7
    %
    
    
    7.2Subordinated Debt
    
    
    31,692
    
    
    
    42,560
    
    
    
    8.1
    %
    
    
    12.6Total Loans
    
    $
    214,521
    
    
    $
    254,984
    Collateral Property Type
    
    
    
    
    
    Geographic LocationHospitality
    
    
    41.4
    %
    
    Northeast
    
    
    0.0
    %Industrial
    
    
    51.2
    %
    
    Mid-Atlantic
    
    
    23.3
    %Office
    
    
    0.0
    %
    
    Southeast
    
    
    61.0
    %Retail
    
    
    7.4
    %
    
    Southwest
    
    
    0.0
    %Multifamily
    
    
    0.0
    %
    
    Midwest
    
    
    7.4
    %Other
    
    
    0.0
    %
    
    West
    
    
    8.3
    %Mixed Use
    
    
    0.0
    %
    
    Other
    
    
    0.0
    %100.0
    %
    
    
    
    
    100.0
    %
 Summary of Interest Characteristics
    6




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Summary of Maturities
  Number ofInvestmentsYear of Maturity
    
    Maturing
    
    
    Carrying Value
    
    
    % of Total2011
    
    
    3
    
    
    $
    125,302
    
    
    
    27.2
    %2012
    
    
    2
    
    
    
    88,408
    
    
    
    19.2
    %2013
    
    
    2
    
    
    
    71,099
    
    
    
    15.4
    %2014
    
    
    2
    
    
    
    39,058
    
    
    
    8.5
    %2015
    
    
    1
    
    
    
    15,818
    
    
    
    3.4
    %2016
    
    
    
    
    
    
    
    
    
    
    0.0
    %2017
    
    
    5
    
    
    
    40,799
    
    
    
    8.9
    %2018
    
    
    
    
    
    
    
    
    
    
    0.0
    %2019 and thereafter
    
    
    13
    
    
    
    79,933
    
    
    
    17.4
    %Total
    
    
    28
    
    
    $
    460,417
    
    
    
    100.0
    %
 Regulation
   Competition
  Employees
   7




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The Manager
     Taxation of the Company
    8




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Leverage Policies
  Investment Guidelines
  
    
    our investments will be in our target assets;
    
    no investment shall be made that would cause us to fail to qualify as a REIT for
federal income tax purposes;
    
    no investment shall be made that would cause us or any of our subsidiaries to be
required to be registered as an investment company under the 1940 Act;
    
    not more than 25% of our equity will be invested in any individual asset without the
consent of a majority of our independent directors;
    
    until appropriate investments can be identified, our Manager may invest the proceeds
of our initial public offering and any future offerings of our equity or debt
securities in interest-bearing, short-term investments, including Agency RMBS,
AAA-rated CMBS and money market accounts and/or funds, that are consistent with our
intention to qualify as a REIT; and
    
    any investment of up to $25 million requires the approval of our Chief Executive
Officer; any investment from $25 million to $75 million requires the approval of our
Managers Investment Committee; any investment from $75 million to $150 million
requires the approval of the Investment Committee of our board of directors and our
Managers Investment Committee; and any investment in excess of $150 million requires
the approval of our board of directors.
  Available Information
 www.starwoodpropertytrust.com
  9




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Item 1A. Risk Factors.
 In addition to the other information in this document, you should consider carefully the
following risk factors in evaluating an investment in our securities. Any of these risks or the
occurrence of any one or more of the uncertainties described below could have a material adverse
effect on our business, financial condition, results of operations, cash flows, and trading price
of our common stock.
 Risks Related to Our Relationship with Our Manager
 We are dependent on Starwood Capital Group, including our Manager, and their key personnel,
especially Mr. Sternlicht, who provide services to us through the management agreement, and we may
not find a suitable replacement for our Manager and Starwood Capital Group if the management
agreement is terminated, or for these key personnel if they leave Starwood Capital Group or
otherwise become unavailable to us.
   
  10




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There are various conflicts of interest in our relationship with Starwood Capital Group, including
our Manager, which could result in decisions that are not in the best interests of our
stockholders.
   11




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The management agreement with our Manager was not negotiated on an arms-length basis and may not
be as favorable to us as if it had been negotiated with an unaffiliated third party and may be
costly and difficult to terminate.
     12




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The incentive fee payable to our Manager under the management agreement is payable quarterly and is
based on our Core Earnings and therefore, may cause our Manager to select investments in more risky
assets to increase its incentive compensation.
  Our conflicts of interest policy may not adequately address all of the conflicts of interest that
may arise with respect to our investment activities and also may limit the allocation of
investments to us.
   13




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Our board of directors has approved very broad investment guidelines for our Manager and does not
approve each investment and financing decision made by our Manager unless required by our
investment guidelines.
  Risks Related to Our Company
 We have a limited operating history and may not be able to operate our business successfully or
generate sufficient revenue to make or sustain distributions to our stockholders.
  Our board of directors may change any of our investment strategy or guidelines, financing strategy
or leverage policies without stockholder consent.
  We are highly dependent on information systems and systems failures could significantly disrupt our
business, which may, in turn, negatively affect the market price of our common stock and our
ability to pay dividends.
   14




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Terrorist attacks and other acts of violence or war may affect the real estate industry and our
business, financial condition and results of operations.
    Risks Related to U.S. Government Programs
 There can be no assurance that the actions of the U.S. Government, the Federal Reserve, including
the U.S. Treasury and other governmental and regulatory bodies, for the purpose of stabilizing the
financial markets, including the establishment of the TALF and the PPIP, will achieve the intended
effect, or that our business will benefit from these actions, and further government or market
developments could adversely impact us.
   15




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The terms and conditions of the Legacy Loans Program have not been finalized and there is no
assurance that the final terms will enable us to participate in the Legacy Loans Program in a
manner consistent with our investment strategy.
  The terms and conditions of the TALF may change, which could adversely affect our investments.
   17




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We could lose our eligibility as a TALF borrower, which would adversely affect our financial
condition.
  Our ability to transfer any assets purchased using TALF funding is restricted.
    We may need to surrender eligible TALF assets to repay TALF loans at maturity.
   18




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Under the TALF, FRBNY consent is required to exercise our voting rights on the collateral.
  In accessing the TALF, we are dependent on the activities of our TALF agents.
  We will be subject to interest rate risk, which can adversely affect our net income.
  Our ability to receive the interest earnings may be limited.
     19




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Under certain conditions, we may be required to provide full recourse for TALF loans or to make
indemnification payments.
  Risks Related to Sources of Financing
 Our access to sources of financing may be limited and thus our ability to maximize our returns may
be adversely affected.
   
    
    general market conditions;
    
    the markets view of the quality of our assets;
    
    the markets perception of our growth potential;
    
    our current and potential future earnings and cash distributions; and
    
    the market price of the shares of our common stock.
    20




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We may incur significant debt, which will subject us to increased risk of loss and may reduce cash
available for distributions to our stockholders, and our governing documents contain no limitation
on the amount of debt we may incur.
  
    
    our cash flow from operations may be insufficient to make required
payments of principal of and interest on the debt or we may fail to
comply with all of the other covenants contained in the debt, which is
likely to result in (i) acceleration of such debt (and any other debt
containing a cross-default or cross-acceleration provision) that we
may be unable to repay from internal funds or to refinance on
favorable terms, or at all, (ii) our inability to borrow unused
amounts under our financing arrangements, even if we are current in
payments on borrowings under those arrangements and/or (iii) the loss
of some or all of our assets to foreclosure or sale;
    
    our debt may increase our vulnerability to adverse economic and
industry conditions with no assurance that investment yields will
increase with higher financing costs;
    
    we may be required to dedicate a substantial portion of our cash flow
from operations to payments on our debt, thereby reducing funds
available for operations, future business opportunities, stockholder
distributions or other purposes; and
    
    we are not able to refinance debt that matures prior to the investment
it was used to finance on favorable terms, or at all.
 Interest rate fluctuations could significantly decrease our results of operations and cash flows
and the market value of our investments.
   21




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In the event non-recourse long-term securitizations become available to us in the future, such
structures may expose us to risks which could result in losses to us.
  Any warehouse facilities that we may obtain may limit our ability to acquire assets, and we may
incur losses if the collateral is liquidated.
   22




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Any repurchase agreements and bank credit facilities that we may use to finance our assets may
require us to provide additional collateral or pay down debt.
  Lenders may require us to enter into restrictive covenants relating to our operations.
  If one or more of our Managers executive officers are no longer employed by our Manager, financial
institutions providing any financing arrangements we may have may not provide future financing to
us, which could materially and adversely affect us.
   23




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We may seek to utilize non-recourse long-term securitizations in the future, and such structures
may expose us to risks, which could result in losses to us.
  Risks Related to Hedging
 We may enter into hedging transactions that could expose us to contingent liabilities in the
future.
  Hedging against interest rate exposure may adversely affect our earnings, which could reduce our
cash available for distribution to our stockholders.
  
    
    interest rate hedging can be expensive, particularly during periods of
rising and volatile interest rates;
    
    available interest rate hedges may not correspond directly with the
interest rate risk for which protection is sought;
    
    due to a credit loss, the duration of the hedge may not match the
duration of the related liability;
    
    the amount of income that a REIT may earn from hedging transactions
(other than hedging transactions that satisfy certain requirements of
the Code or that are done through a taxable REIT subsidiary (TRS))
to offset interest rate losses is limited by U.S. federal tax
provisions governing REITs;
  24




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
    
    the credit quality of the hedging counterparty owing money on the
hedge may be downgraded to such an extent that it impairs our ability
to sell or assign our side of the hedging transaction; and
    
    the hedging counterparty owing money in the hedging transaction may
default on its obligation to pay.
   Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its
clearing house, or regulated by any U.S. or foreign governmental authorities and involve risks and
costs that could result in material losses.
  We may fail to qualify for hedge accounting treatment.
  We may enter into derivative contracts that could expose us to contingent liabilities in the
future.
 e.g.
  25




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Risks Related to Our Investments
 We may not be able to identify assets that meet our investment objective.
   The lack of liquidity in our investments may adversely affect our business.
  Our investments may be concentrated and will be subject to risk of default.
   26




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Difficult conditions in the mortgage, commercial and residential real estate markets may cause us
to experience market losses related to our holdings, and we do not expect these conditions to
improve in the near future.
  We operate in a highly competitive market for investment opportunities and competition may limit
our ability to acquire desirable investments in our target assets and could also affect the pricing
of these securities.
   27




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The commercial mortgage loans we acquire and the mortgage loans underlying our CMBS investments are
subject to the ability of the commercial property owner to generate net income from operating the
property as well as the risks of delinquency and foreclosure.
  
    
    tenant mix;
    
    success of tenant businesses;
    
    property management decisions;
    
    property location, condition and design;
    
    competition from comparable types of properties;
    
    changes in laws that increase operating expenses or limit rents that may be charged;
    
    changes in national, regional or local economic conditions and/or specific industry
segments, including the credit and securitization markets;
    
    declines in regional or local real estate values;
    
    declines in regional or local rental or occupancy rates;
    
    increases in interest rates, real estate tax rates and other operating expenses;
    
    costs of remediation and liabilities associated with environmental conditions;
    
    the potential for uninsured or underinsured property losses;
    
    changes in governmental laws and regulations, including fiscal policies, zoning
ordinances and environmental legislation and the related costs of compliance; and
    
    acts of God, terrorist attacks, social unrest and civil disturbances.
  Our investments in CMBS are generally subject to losses.
   28




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We may not control the special servicing of the mortgage loans included in the CMBS in which we
invest and, in such cases, the special servicer may take actions that could adversely affect our
interests.
  If our Manager overestimates the yields or incorrectly prices the risks of our investments, we may
experience losses.
  Our investments in corporate bank debt and debt securities of commercial real estate operating or
finance companies will be subject to the specific risks relating to the particular company and to
the general risks of investing in real estate-related loans and securities, which may result in
significant losses.
   
    
    risks of delinquency and foreclosure, and risks of loss in the event thereof;
    
    the dependence upon the successful operation of, and net income from, real property;
    
    risks generally incident to interests in real property; and
    
    risks specific to the type and use of a particular property.
   29




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Investments in non-conforming and non-investment grade rated loans or securities involve increased
risk of loss.
  Any credit ratings assigned to our investments will be subject to ongoing evaluations and revisions
and we cannot assure you that those ratings will not be downgraded.
  The B Notes that we may acquire may be subject to additional risks related to the privately
negotiated structure and terms of the transaction, which may result in losses to us.
  Our mezzanine loan assets will involve greater risks of loss than senior loans secured by
income-producing properties.
   30




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Bridge loans will involve a greater risk of loss than traditional investment-grade mortgage loans
with fully insured borrowers.
   The residential mortgage loans that we may acquire, and that underlie the RMBS we may acquire, are
subject to risks particular to investments secured by mortgage loans on residential real estate
property.
  
    
    acts of God, which may result in uninsured losses;
    
    acts of war or terrorism, including the consequences of events;
    
    adverse changes in national and local economic and market conditions;
    
    changes in governmental laws and regulations, including fiscal policies, zoning
ordinances and environmental legislation and the related costs of compliance;
    
    costs of remediation and liabilities associated with environmental conditions; and
    
    the potential for uninsured or under-insured property losses.
   31




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Prepayment rates may adversely affect the value of our investment portfolio.
   
    
    We may purchase RMBS that have a higher interest rate than the market
interest rate at the time. In exchange for this higher interest rate,
we may pay a premium over the par value to acquire our mortgage asset.
In accordance with GAAP, we may amortize this premium over the
estimated term of our mortgage asset. If our mortgage asset is prepaid
in whole or in part prior to its maturity date, however, we may be
required to expense the premium that was prepaid at the time of the
prepayment.
    
    We anticipate that a substantial portion of our adjustable-rate RMBS
may bear interest rates that are lower than their fully indexed rates,
which are equivalent to the applicable index rate plus a margin. If an
adjustable-rate RMBS is prepaid prior to or soon after the time of
adjustment to a fully-indexed rate, we will have held that RMBS while
it was least profitable and lost the opportunity to receive interest
at the fully indexed rate over the remainder of its expected life.
    
    Prepayment rates generally increase when interest rates fall and
decrease when interest rates rise, making it unlikely that we would be
able to reinvest the proceeds of any prepayment in mortgage assets of
similar quality and terms (including yield). If we are unable to
invest in similar mortgage assets, we would be adversely affected.
  Interest rate mismatches between our Agency RMBS backed by ARMs and our borrowings used to fund our
purchases of these assets may reduce our net interest income and cause us to suffer a loss during
periods of rising interest rates.
   32




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##### Table of Contents



We may acquire subprime or alternative documentation residential mortgage loans, which are subject
to increased risks.
  Construction loans involve an increased risk of loss.
  Risks of cost overruns and noncompletion of renovation of the properties underlying rehabilitation
loans may result in significant losses.
   33




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##### Table of Contents



Interest rate fluctuations could reduce our ability to generate income on our investments and may
cause losses.
  We may experience a decline in the fair value of our assets.
  Some of our portfolio investments will be recorded at fair value and, as a result, there will be
uncertainty as to the value of these investments.
  Liability relating to environmental matters may impact the value of properties that we may acquire
upon foreclosure of the properties underlying our investments.
   34




---



##### Table of Contents



Mortgage loan modification programs and future legislative action may adversely affect the value
of, and the returns on, the target assets in which we intend to invest.
     35




---



##### Table of Contents



Risks Related to Our Organization and Structure
 Certain provisions of Maryland law could inhibit changes in control.
    Our authorized but unissued shares of common and preferred stock may prevent a change in our
control.
  Maintenance of our exemption from registration under the 1940 Act imposes significant limits on our
operations.
   36




---



##### Table of Contents



Rapid changes in the values of our other real estate-related investments may make it more difficult
for us to maintain our qualification as a REIT or exemption from the 1940 Act.
  Our rights and the rights of our stockholders to take action against our directors and officers are
limited, which could limit your recourse in the event of actions not in your best interests.
  
    
    actual receipt of an improper benefit or profit in money, property or services; or
    
    active and deliberate dishonesty by the director or officer that was established
by a final judgment as being material to the cause of action adjudicated.
   37




---



##### Table of Contents



Our charter contains provisions that make removal of our directors difficult, which could make it
difficult for our stockholders to effect changes to our management.
  Ownership limitations may restrict change of control or business combination opportunities in which
our stockholders might receive a premium for their shares.
  Risks Related to Our Taxation as a REIT
 If we do not qualify as a REIT or fail to remain qualified as a REIT, we will be subject to tax as
a regular corporation and could face a substantial tax liability, which would reduce the amount of
cash available for distribution to our stockholders.
    38




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##### Table of Contents



Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
  We may in the future choose to pay dividends in our own stock, in which case you may be required to
pay income taxes in excess of the cash dividends you receive.
   REIT distribution requirements could adversely affect our ability to execute our business plan.
    39




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##### Table of Contents



The stock ownership limit imposed by the Code for REITs and our charter may restrict our business
combination opportunities.
  Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.
  Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.
   40




---



##### Table of Contents



Complying with REIT requirements may force us to liquidate otherwise attractive investments.
  The failure of assets subject to repurchase agreements to qualify as real estate assets could
adversely affect our ability to qualify as a REIT.
  We may be required to report taxable income for certain investments in excess of the economic
income we ultimately realize from them.
    41




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##### Table of Contents



The taxable mortgage pool rules may increase the taxes that we or our stockholders may incur, and
may limit the manner in which we effect future securitizations.
  The tax on prohibited transactions will limit our ability to engage in transactions, including
certain methods of securitizing mortgage loans, which would be treated as sales for federal income
tax purposes.
  Our investments in construction loans will require us to make estimates about the fair value of
land improvements that may be challenged by the IRS.
   42




---



##### Table of Contents



The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our
ability to qualify as a REIT.
  Liquidation of assets may jeopardize our REIT qualification.
  Complying with REIT requirements may limit our ability to hedge effectively and may cause us to
incur tax liabilities.
  Qualifying as a REIT involves highly technical and complex provisions of the Code.
  
 Item 1B. Unresolved Staff Comments.
   43




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##### Table of Contents



Item 2. Properties.
  
 Item 3. Legal Proceedings.
  
 Item 4. Reserved.
  44




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
 Market Information and Dividends
  2009
    
    High
    
    
    Low
    
    
    DividendThird quarter (since August 17, 2009)
    
    $
    20.61
    
    
    $
    19.06
    
    
    $
    0.01
    (1)Fourth quarter
    
    $
    21.71
    
    
    $
    18.26
    
    
    $
    0.10
    (2)
 
 (1)
    
    The Company declared a dividend to stockholders of record on October 31, 2009,
which was paid on January 29, 2010.(2)
    
    The Company declared a dividend to stockholders of record on December 30, 2009,
which was paid on January 29, 2010.    Holders
   45




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##### Table of Contents



Securities Authorized for Issuance Under Equity Compensation Plans
  Stock Performance Graph
 
 8/11/2009
    
    
    9/30/2009
    
    
    12/31/2009Starwood Property Trust
    
    
    100.00
    
    
    
    101.25
    
    
    
    94.56S&P © 500
    
    
    100.00
    
    
    
    106.31
    
    
    
    112.14Bloomberg REIT Mortgage Index
    
    
    100.00
    
    
    
    109.43
    
    
    
    118.87
  46




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##### Table of Contents



Item 6. Selected Financial Data.
  For the Period fromAugust 17, 2009(Commencement ofOperations) ThroughDecember 31, 2009Operating Data:Investment interest income
    
    $
    6,927Interest expense
    
    
    (1,904
    )Net interest margin
    
    
    5,023Total operating expenses
    
    
    (9,286
    )Net loss
    
    
    (2,580
    )Net loss attributable to Starwood Property Trust, Inc.
    
    $
    (3,017
    )Net loss per share of common stock:Basic
    
    $
    (0.06
    )Diluted
    
    $
    (0.06
    )Dividends declared per share of common stock
    
    $
    0.11Weighted average shares of common stock outstanding:Basic
    
    
    47,575,634Diluted
    
    
    47,575,634Balance Sheet Data:Investments in securities
    
    $
    245,896Investments in loans
    
    
    214,521Total assets
    
    
    1,108,786Total indebtedness
    
    
    171,394Total liabilities
    
    
    212,751Total Starwood Property Trust, Inc. Stockholders Equity
    
    
    887,967Total Equity
    
    $
    896,035
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
    47




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##### Table of Contents




    
    We invested $214.5 million in fixed rate commercial mortgage loans, including a $109
million portfolio of loans on seven industrial properties in the Southeast region of the
United States, a $16 million loan on a retail center in Orland Park, IL, a $18 million loan
on an hotel in Laguna Beach, CA, and a $74 million loan on a portfolio of 17 extended stay
hotels located in the Southeast and Mid-Atlantic regions of the United States.
 
    
    We invested $202.6 million in AAA-rated CMBS securities and obtained approximately
$171.6 million of five-year term financing from the Term Asset-Backed Securities Loan
Facility in connection with the investment. Our pro rata share of the $31.1 million equity
investment was approximately $23.3 million, which represents a 75% ownership interest.
 
    
    We invested $43.3 million in single-borrower CMBS secured by hotel assets.
  Property
    
    Book
    
    
    Face
    
    
    %
    
    
    
    
    
    
    NetInvestment
    
    Type
    
    Value
    
    
    Amount
    
    
    Owned
    
    
    Financing
    
    
    Investment
    
    
    Rating
    
    VintageMulti-Asset CMBS
    
    Assorted
    
    $
    202,646
    
    
    $
    202,699
    
    
    
    75
    %
    
    $
    171,394
    
    
    $
    31,252
    
    
    AAA
    
    2006-2007Single-Borrower CMBS
    
    Hospitality
    
    
    43,250
    
    
    
    53,712
    
    
    
    100
    %
    
    
    
    
    
    
    43,250
    
    
    BB
    
    2001-2006Loan Originations
    
    Assorted
    
    
    104,702
    
    
    
    107,722
    
    
    
    100
    %
    
    
    
    
    
    
    104,702
    
    
    N/A
    
    2009Loan Acquisitions
    
    Industrial
    
    
    109,819
    
    
    
    147,262
    
    
    
    100
    %
    
    
    
    
    
    
    109,819
    
    
    N/A
    
    1999$
    460,417
    
    
    $
    511,395
    
    
    
    
    
    
    $
    171,394
    
    
    $
    289,023
  48




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##### Table of Contents



Distributions to Stockholders
  Business Objectives and Outlook
   Critical Accounting Policies and Use of Estimates
   49




---



##### Table of Contents



Classification of Investment Securities
    Loans Held-for-Investment
  Loan Impairment
   50




---



##### Table of Contents



Valuation of Financial Instruments
  Level I
 Level II
 Level III
   Investment Consolidation
  Interest Income Recognition
   Income Taxes
   51




---



##### Table of Contents



Recent Accounting Pronouncements
 Accounting Standards Codification.
 Amendments to Variable Interest Entity Accounting
 Fair Value Measurements and Disclosures
 Results of Operations
    Cash Flows
     52




---



##### Table of Contents



Liquidity and Capital Resources
     The Term Asset-Backed Securities Loan Facility
   53




---



##### Table of Contents



Repurchase Agreements
  Bank Credit Facilities
  Warehouse Facilities
  Securitizations
  Other Potential Sources of Financing
   54




---



##### Table of Contents



Leverage Policies
  Contractual Obligations and Commitments
  Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1 to 3 years
    
    
    3 to 5 years
    
    
    5 yearsSecured financings,
including interest
payable
    
    $
    184,427
    
    
    $
    6,932
    
    
    $
    177,495
    
    
    $
    
    
    
    $
    Deferred underwriting fees
    
    
    27,195
    
    
    
    
    
    
    
    27,195
    
    
    
    
    
    
    
    Total
    
    $
    211,622
    
    
    $
    6,932
    
    
    $
    204,690
    
    
    $
    
    
    
    $
    
   Base Management Fee
 Incentive Fee
  55




---



##### Table of Contents



Expense Reimbursement
  Termination Fee
 Off-Balance Sheet Arrangements
  Dividends
   56




---



##### Table of Contents



Non-GAAP Financial Measures
      Amounts
    
    
    Per ShareNet loss attributable to Starwood Property Trust, Inc.
    
    $
    (3,017
    )
    
    $
    (0.06
    )Add back for non-cash stock-based compensation
    
    
    2,421
    
    
    
    0.05Core Earnings (Loss)
    
    $
    (596
    )
    
    $
    (0.01
    )
  57




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
  Credit Risk
    S&P Rating
    
    Carry Value
    
    
    PercentageAAA
    
    $
    202,646
    
    
    
    82.4
    %A
    
    
    1,384
    
    
    
    0.6
    %BBB
    
    
    8,917
    
    
    
    3.6
    %BBB-
    
    
    9,355
    
    
    
    3.8
    %BB+
    
    
    12,680
    
    
    
    5.2
    %BB
    
    
    10,914
    
    
    
    4.4
    %$
    245,896
    
    
    
    100.0
    %
 Interest Rate Risk
    58




---



##### Table of Contents



Interest Rate Effect on Net Interest Income
   Interest Rate Mismatch Risk
   Prepayment Risk
  Extension Risk
   59




---



##### Table of Contents



Market Risk
 Market Value Risk.
 Real Estate Risk.
 Inflation Risk
  Risk Management
  
    
    attempting to structure our financing agreements to have a range of
different maturities, terms, amortizations and interest rate
adjustment periods;
    
    using hedging instruments, primarily interest rate swap agreements but
also financial futures, options, interest rate cap agreements, floors
and forward sales to adjust the interest rate sensitivity of our
investment portfolio and our borrowings; and
    
    using securitization financing to better match the maturity of our
financing with the duration of our assets.
  60




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 Index to Financial Statements and Schedule
 Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    62Consolidated Balance Sheet as of December 31, 2009
    
    
    63Consolidated Statement of Operations for the period from August 17, 2009
(commencement of operations) to December 31, 2009
    
    
    64Consolidated Statement of Equity for the period from August 17, 2009
(commencement of operations) to December 31, 2009
    
    
    65Consolidated Statement of Cash Flows for the period from August 17, 2009
(commencement of operations) to December 31, 2009
    
    
    66Notes to Consolidated Financial Statements
    
    
    67ScheduleSchedule IV   Mortgage Loans on Real Estate as of December 31, 2009
    
    
    76
   61




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##### Table of Contents



/s/ DELOITTE & TOUCHE LLP
 
  62




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##### Table of Contents



Starwood Property Trust, Inc. and Subsidiaries
 
 Consolidated Balance Sheet
 (Amounts in thousands, except share data)
 As ofDecember 31, 2009Assets:Cash and cash equivalents
    
    $
    645,129Investments in mortgage backed securities, net
    
    
    245,896Investments in loans, net
    
    
    214,521Accrued interest receivable
    
    
    2,180Deferred financing costs, net of accumulated amortization of $20
    
    
    323Other assets
    
    
    737Total Assets
    
    $
    1,108,786Liabilities and Stockholders EquityLiabilities:Accounts payable and accrued expenses
    
    $
    1,034Related-party payable
    
    
    3,546Dividends payable
    
    
    5,349Secured financing agreements
    
    
    171,394Deferred offering costs
    
    
    27,195Other liabilities
    
    
    4,233Total Liabilities
    
    
    212,751Commitments and contingencies (Note 10)
    
    
    Equity:Starwood Property Trust, Inc. Stockholders Equity:Preferred stock, $0.01 per share 100,000,000 shares authorized,
no shares issued and outstanding
    
    
    Common stock, $0.01 per share, 500,000,000 shares authorized
47,583,800 issued and outstanding
    
    
    476Additional paid-in capital
    
    
    895,857Accumulated deficit
    
    
    (8,366
    )Total Starwood Property Trust, Inc. Stockholders Equity
    
    
    887,967Noncontrolling interests in consolidated entity
    
    
    8,068Total Equity
    
    
    896,035Total Liabilities and Equity
    
    $
    1,108,786
   63




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##### Table of Contents



Starwood
Property Trust, Inc. and Subsidiaries
 
 Consolidated
Statement of Operations
 (Amounts in thousands, except share and per share data)
 For the Period fromAugust 17, 2009(Commencement ofOperations) throughDecember 31, 2009Net interest margin:Interest income from mortgage backed securities
    
    $
    4,468Interest income from loans
    
    
    2,459Interest expense
    
    
    (1,904
    )Net interest margin
    
    
    5,023Expenses:Management fees (including $2,393 of non-cash stock-based compensation)
    
    
    7,471General and administrative (including $28 of non-cash stock-based compensation)
    
    
    1,815Total operating expenses
    
    
    9,286Interest income from cash balances
    
    
    1,683Net loss
    
    $
    (2,580
    )Net income attributable to noncontrolling interests
    
    
    437Net loss attributable to Starwood Property Trust, Inc.
    
    $
    (3,017
    )Net loss per share of common stock:Basic
    
    $
    (0.06
    )Diluted
    
    $
    (0.06
    )Weighted average number of shares of common stock outstanding:Basic
    
    
    47,575,634Diluted
    
    
    47,575,634
   64




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##### Table of Contents



Starwood Property Trust, Inc. and Subsidiaries
 
 Consolidated Statement of Equity

(Amounts in thousands, except share data)
 TotalStarwoodAdditional
    
    
    
    
    
    
    Property
    
    
    Non-Common Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Trust, Inc.
    
    
    controllingShares
    
    
    Par Value
    
    
    Capital
    
    
    Deficit
    
    
    Equity
    
    
    Interests
    
    
    Total EquityBalance at August 17, 2009
(Commencement of Operations)
    
    
    100
    
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    1Proceeds from public offering of common stock
    
    
    46,575,000
    
    
    
    466
    
    
    
    931,034
    
    
    
    
    
    
    
    931,500
    
    
    
    
    
    
    
    931,500Underwriting and offering costs
    
    
    
    
    
    
    
    
    
    
    (57,588
    )
    
    
    
    
    
    
    (57,588
    )
    
    
    
    
    
    
    (57,588
    )Proceeds from private placement
    
    
    1,000,000
    
    
    
    10
    
    
    
    19,990
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    20,000Cancellation of shares
    
    
    (100
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Stock-based compensation
    
    
    8,800
    
    
    
    
    
    
    
    2,421
    
    
    
    
    
    
    
    2,421
    
    
    
    
    
    
    
    2,421Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,017
    )
    
    
    (3,017
    )
    
    
    437
    
    
    
    (2,580
    )Dividends declared, $0.11 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,349
    )
    
    
    (5,349
    )
    
    
    
    
    
    
    (5,349
    )Contribution from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,855
    
    
    
    50,855Distribution to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,224
    )
    
    
    (43,224
    )Balance at December 31, 2009
    
    
    47,583,800
    
    
    $
    476
    
    
    $
    895,857
    
    
    $
    (8,366
    )
    
    $
    887,967
    
    
    $
    8,068
    
    
    $
    896,035
   65




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##### Table of Contents



Starwood Property Trust, Inc. and Subsidiaries
 
 Consolidated Statement of Cash Flows
(Amounts in thousands)
 For the Period fromAugust 17, 2009(Commencement ofOperations) throughDecember 31, 2009Cash Flows from Operating Activities:Net loss
    
    $
    (2,580
    )Adjustments to reconcile net loss to net cash provided from operating activities:Amortization of deferred financing costs
    
    
    20Amortization of net discount on mortgage backed securities
    
    
    (347
    )Amortization of net deferred loan fees and discounts
    
    
    (318
    )Stock-based compensation
    
    
    2,421Changes in operating assets and liabilities:Related-party payable
    
    
    3,546Interest income receivable, less purchased interest from mortgage backed securities
    
    
    (862
    )Interest income receivable, less purchased interest from loans
    
    
    (817
    )Other assets
    
    
    (737
    )Accounts payable and accrued expenses
    
    
    1,034Other liabilities
    
    
    4,233Net cash provided by operating activities
    
    $
    5,593Cash Flows from Investing Activities:Investment in mortgage backed securities held to maturity
    
    
    (245,607
    )Mortgage backed securities investment repayments
    
    
    58Investment in loans
    
    
    (215,353
    )Loan investment repayments
    
    
    1,150Purchased interest on mortgage backed securities, net
    
    
    (373
    )Purchased interest on loans, net
    
    
    (128
    )Net cash used in investing activities
    
    $
    (460,253
    )Cash Flows from Financing Activities:Borrowings of secured financing arrangements
    
    
    171,579Principal repayments on borrowings
    
    
    (185
    )Payment of deferred financing costs
    
    
    (343
    )Repurchase and cancellation of shares
    
    
    (1
    )Proceeds from common stock offerings
    
    
    951,500Payments of underwriting and offering costs
    
    
    (30,393
    )Contribution from noncontrolling interest owners
    
    
    50,855Distribution to noncontrolling interest owners
    
    
    (43,224
    )Net cash provided by financing activities
    
    $
    1,099,788Net increase in cash and cash equivalents
    
    
    645,128Cash and cash equivalents, beginning of period
    
    
    1Cash and cash equivalents, end of period
    
    $
    645,129Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    1,617Supplemental disclosure of non-cash financing activity:Dividends declared, not yet paid
    
    $
    5,349Deferred offering costs
    
    $
    27,195
   66




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##### Table of Contents



1. Business and Organization
    2. Summary of Significant Accounting Policies
 Recent Accounting Pronouncements
 Accounting Standards Codification (ASC)
 Amendments to Variable Interest Entity Accounting
 Fair Value Measurements and Disclosures
 Basis of Accounting and Principles of Consolidation
   67




---



##### Table of Contents



Segment Reporting
  Cash and Cash Equivalents
  Debt Securities
   Loans Held for Investment
   68




---



##### Table of Contents



Revenue Recognition
  Concentration of Credit Risk
  Deferred Financing Costs
  Earnings per share
  Share-based payments
   69




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##### Table of Contents



Income Taxes
  Underwriting Commissions and Offering Costs
  3. Commercial Mortgage-Backed Securities (CMBS)
  Gross Book
    
    
    PremiumValue
    
    
    (Discount)
    
    
    Net Book ValueAcquisition of multi-borrower CMBS
    
    $
    202,699
    
    
    $
    (66
    )
    
    $
    202,633Acquisition of single-borrower CMBS
    
    
    53,770
    
    
    
    (10,796
    )
    
    
    42,974Principal paydowns
    
    
    (58
    )
    
    
    
    
    
    
    (58
    )Discount/premium amortization
    
    
    
    
    
    
    347
    
    
    
    347Balance as of December 31, 2009
    
    $
    256,411
    
    
    $
    (10,515
    )
    
    $
    245,896
  Investment
    
    Book Value
    
    
    Face Amount
    
    
    Coupon(1)
    
    
    Rating
    
    
    Vintage
    
    
    Life (years)Multi-Asset CMBS
    
    $
    202,646
    
    
    $
    202,699
    
    
    
    5.7
    %
    
    AAA
    
    
    2006-2007
    
    
    
    2.1Single Borrower CMBS
    
    
    43,250
    
    
    
    53,712
    
    
    
    5.4
    %
    
    BB+
    
    
    2001-2006
    
    
    
    6.3$
    245,896
    
    
    $
    256,411
 (1)
    
    Calculated using the December 31, 2009 one month LIBOR rate of 0.2309%.  70




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##### Table of Contents



Collateral Property Type
    
    
    
    
    
    Geographic LocationHospitality
    
    
    25.0
    %
    
    Northeast
    
    
    26.3
    %Industrial
    
    
    5.0
    %
    
    Mid-Atlantic
    
    
    7.3
    %Office
    
    
    33.7
    %
    
    Southeast
    
    
    14.1
    %Retail
    
    
    24.0
    %
    
    Southwest
    
    
    9.8
    %Multifamily
    
    
    9.5
    %
    
    Midwest
    
    
    10.0
    %Other
    
    
    2.2
    %
    
    West
    
    
    24.9
    %Mixed Use
    
    
    0.6
    %
    
    Other
    
    
    7.6
    %100.0
    %
    
    
    
    
    100.0
    %
 4. Loans
  Originations/acquisitions
    
    $
    215,048Additional fundings (1)
    
    
    305Principal pay downs
    
    
    (1,150
    )Discount/premium amortization
    
    
    318Provision for credit losses
    
    
    Balance December 31, 2009
    
    $
    214,521
 (1)
    
    Represents accrued interest income on loans whose terms do not require current payment of
interest.  WeightedWeighted
    
    
    AverageAverage
    
    
    LifeInvestment
    
    Book Value
    
    
    Face Amount
    
    
    Coupon
    
    
    (years)First Mortgages
    
    $
    182,829
    
    
    $
    212,424
    
    
    
    8.7
    %
    
    
    7.2Subordinated Debt
    
    
    31,692
    
    
    
    42,560
    
    
    
    8.1
    %
    
    
    12.6Total Loans
    
    $
    214,521
    
    
    $
    254,984
  Collateral Property Type
    
    
    
    
    
    Geographic LocationHospitality
    
    
    41.4
    %
    
    Northeast
    
    
    0.0
    %Industrial
    
    
    51.2
    %
    
    Mid-Atlantic
    
    
    23.3
    %Office
    
    
    0.0
    %
    
    Southeast
    
    
    61.0
    %Retail
    
    
    7.4
    %
    
    Southwest
    
    
    7.4
    %Multifamily
    
    
    0.0
    %
    
    Midwest
    
    
    0.0
    %Other
    
    
    0.0
    %
    
    West
    
    
    8.3
    %Mixed Use
    
    
    0.0
    %
    
    Other
    
    
    0.0
    %100.0
    %
    
    
    
    
    100.0
    %
  71




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5. Secured Financing Facilities
  Debt
    
    
    Collateral BookBook Value
    
    
    ValueAugust 28, 2009, TALF loans, fixed rate
3.872%, mature August 2014
    
    $
    55,030
    
    
    $
    64,898September 25, 2009, TALF loans, fixed rate
3.796%, mature September 2014
    
    
    116,364
    
    
    
    137,748Total
    
    $
    171,394
    
    
    $
    202,646
  2010
    
    $
    452011
    
    
    85,8522012
    
    
    85,4972013
    
    
    2014 and thereafter
    
    
    Total
    
    $
    171,394
 6. Related-Party Transactions
     72




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7. Stockholders Equity
    Equity Incentive Plans
     73




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Schedule of Non-Vested Share and Share Equivalents
 Restricted
    
    
    Restricted
    
    
    RestrictedStock Grants to
    
    
    Stock Units
    
    
    Stock UnitsIndependent
    
    
    Grants to
    
    
    Grants toDirectors
    
    
    Employees
    
    
    Manager
    
    
    TotalBeginning balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    8,800
    
    
    
    5,000
    
    
    
    1,037,500
    
    
    
    1,051,300Vested
    
    
    
    
    
    
    (417
    )
    
    
    (86,458
    )
    
    
    (86,875
    )Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31, 2009
    
    
    8,800
    
    
    
    4,583
    
    
    
    951,042
    
    
    
    964,425
 Vesting Schedule
 Restricted
    
    
    Restricted
    
    
    RestrictedStock Grants to
    
    
    Stock Units
    
    
    Stock UnitsIndependent
    
    
    Grants to
    
    
    Grants toDirectors
    
    
    Employees
    
    
    Manager
    
    
    Total2010
    
    
    2,933
    
    
    
    1,668
    
    
    
    345,832
    
    
    
    350,4332011
    
    
    2,933
    
    
    
    1,668
    
    
    
    345,832
    
    
    
    350,4332012
    
    
    2,934
    
    
    
    1,247
    
    
    
    259,378
    
    
    
    263,5598,800
    
    
    
    4,583
    
    
    
    951,042
    
    
    
    964,425
 8. Net Loss per Share
  Basic and Diluted:Net loss attributable to Starwood Property Trust, Inc.
    
    $
    (3,017
    )Weighted average number of shares of common stock outstanding
    
    
    47,575,634Basic and diluted net loss per share of common stock
    
    $
    (0.06
    )
  9. Fair Value of Financial Instruments
   74




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Carrying
    
    
    FairValue as of
    
    
    Value as ofDecember 31, 2009
    
    
    December 31, 2009Financial Assets:CMBS
    
    $
    245,896
    
    
    $
    249,457Loans
    
    $
    214,521
    
    
    $
    215,575Financial Liabilities:Secured financing
    
    $
    171,394
    
    
    $
    170,868
 10. Commitments and Contingencies
   11. Quarterly Financial Data
  Quarter EndedSept. 30(1)
    
    
    Dec. 31Revenues
    
    $
    1,448
    
    
    $
    7,162Loss attributable to Starwood Property Trust, Inc.
    
    
    (1,919
    )
    
    
    (1,098
    )Loss per share of common stock  basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.02
    )
 (1)
    
    Represents the period from August 17, 2009 (commencement of operations) to September 30,
2009. 12. Subsequent Events
      75




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##### Table of Contents



Prior
    
    
    Face
    
    
    Carrying
    
    
    Interest
    
    
    Payment
    
    
    MaturityDescription/Location
    
    Liens(1)
    
    
    Amount
    
    
    Amount
    
    
    Rate
    
    
    Terms(2)
    
    
    DateIndustrial / Various
    
    $
    17,396
    
    
    $
    47,569
    
    
    $
    40,799
    
    
    
    7.8
    %
    

    P&I
    
    
    
    9/1/2017Industrial / Various
    
    
    28,204
    
    
    
    99,693
    
    
    
    69,020
    
    
    
    8.2
    %
    
    
    I/O
    
    
    
    9/1/2024Hotel / Various
    
    
    
    
    
    
    73,722
    
    
    
    71,099
    
    
    
    9.5
    %
    
    
    I/O
    
    
    
    1/1/2013Hotel / Laguna, CA
    
    
    
    
    
    
    18,000
    
    
    
    17,785
    
    
    
    9.0
    %
    
    
    I/O
    
    
    
    12/1/2013Retail / Orland Park, IL
    
    
    
    
    
    
    16,000
    
    
    
    15,818
    
    
    
    8.0
    %
    
    
    P&I
    
    
    
    12/31/2014$
    45,600
    
    
    $
    254,984
    
    
    $
    214,521
 (1)
    
    Represents third-party liens.(2)
    
    P&I = principal and interest; I/O = interest only  76




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
     
 Item 9B. Other Information.
   77




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  Code of Ethics
 www.starwoodpropertytrust.com
 
 www.starwoodpropertytrust.com
 Corporate Governance Guidelines
 www.starwoodpropertytrust.com
 
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationship and Related Transactions, and Director Independence.
  
 Item 14. Principal Accountant Fees and Services.
   78




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
       Exhibit No.
    
    Description3.1
    
    
    Articles of Amendment and Restatement of Starwood Property Trust, Inc.
(Incorporated by reference to Exhibit 3.1 of the Companys Quarterly
Report on Form 10-Q filed November 16, 2009)3.2
    
    
    Bylaws of Starwood Property Trust, Inc. (Incorporated by reference to
Exhibit 3.2 of the Companys Quarterly Report on Form 10-Q filed November
16, 2009)10.1
    
    
    Private Placement Purchase Agreement, dated August 11, 2009, between
Starwood Property Trust, Inc. and SPT Investment, LLC (Incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q
filed November 16, 2009)10.2
    
    
    Registration Rights Agreement, dated August 17, 2009, among Starwood
Property Trust, Inc., SPT Investment, LLC and SPT Management, LLC
(Incorporated by reference to Exhibit 10.2 of the Companys Quarterly
Report on Form 10-Q filed November 16, 2009)10.3
    
    
    Management Agreement, dated August 17, 2009, among SPT Management, LLC
and Starwood Property Trust, Inc. (Incorporated by reference to Exhibit
10.3 of the Companys Quarterly Report on Form 10-Q filed November 16,
2009)10.4
    
    
    Co-Investment and Allocation Agreement, dated August 17, 2009, among
Starwood Property Trust, Inc., SPT Management, LLC and Starwood Capital
Group Global, L.P. (Incorporated by reference to Exhibit 10.4 of the
Companys Quarterly Report on Form 10-Q filed November 16, 2009)10.5
    
    
    Starwood Property Trust, Inc. Non-Executive Director Stock Plan
(Incorporated by reference to Exhibit 10.5 of the Companys Quarterly
Report on Form 10-Q filed November 16, 2009)10.6
    
    
    Form of Restricted Stock Award Agreement for Independent Directors
(Incorporated by reference to Exhibit 10.6 of the Companys Quarterly
Report on Form 10-Q filed November 16, 2009)10.7
    
    
    Starwood Property Trust, Inc. Manager Equity Plan (Incorporated by
reference to Exhibit 10.7 of the Companys Quarterly Report on Form 10-Q
filed November 16, 2009)10.8
    
    
    Restricted Stock Unit Award Agreement, dated August 17, 2009, between
Starwood Property Trust, Inc. and SPT Management, LLC (Incorporated by
reference to Exhibit 10.8 of the Companys Quarterly Report on Form 10-Q
filed November 16, 2009)10.9
    
    
    Starwood Property Trust, Inc. Equity Plan (Incorporated by reference to
Exhibit 10.9 of the Companys Quarterly Report on Form 10-Q filed
November 16, 2009)
  79




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##### Table of Contents



Exhibit No.
    
    Description10.10
    
    
    Restricted Stock Unit Award Agreement, dated August 17, 2009, between
Starwood Property Trust, Inc. and Barbara J. Anderson (Incorporated by
reference to Exhibit 10.10 of the Companys Quarterly Report on Form 10-Q
filed November 16, 2009)10.11
    
    
    Underwriting Agreement, dated as of August 11, 2009, among Starwood
Property Trust, Inc., SPT Management, LLC and the underwriters named
therein (Incorporated by reference to Exhibit 10.11 of the Companys
Quarterly Report on Form 10-Q filed November 16, 2009)21.1
    
    
    Subsidiaries of the Company23.1
    
    
    Consent of Deloitte & Touche, LLP31.1
    
    
    Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  80




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##### Table of Contents



SIGNATURES
  Starwood Property Trust, Inc.Date: March 8, 2010
    By:
    /s/ Barry S. SternlichtBarry S. SternlichtChief Executive Officer and
Chairman of the Board of
Directors  Date: March 8, 2010
    By:
    /s/ Barry S. SternlichtBarry S. SternlichtChief Executive Officer and Chairman of
the Board of Directors
(Principal Executive Officer)Date: March 8, 2010
    By:
    /s/ Barbara J. AndersonBarbara J. AndersonChief Financial Officer and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)Date: March 8, 2010
    By:
    /s/ Jeffrey G. DishnerJeffrey G. DishnerDirectorDate: March 8, 2010
    By:
    /s/ Ellis F. RinaldiEllis F. RinaldiDirectorDate: March 8, 2010
    By:
    /s/ Richard D. BronsonRichard D. BronsonDirectorDate: March 8, 2010
    By:
    /s/ Jeffrey F. DiModicaJeffrey F. DiModicaDirectorDate: March 8, 2010
    By:
    /s/ Camille J. DouglasCamille J. DouglasDirectorDate: March 8, 2010
    By:
    /s/ Strauss ZelnickStrauss ZelnickDirector  81