Starwood Credit Real Estate Income Trust's Net Income Soars 266% YTD

TL;DR

**Starwood Credit Real Estate Income Trust is crushing it, with net income up 266% YTD, making it a strong buy in the REIT space.**

AI Summary

Starwood Credit Real Estate Income Trust reported a significant increase in net income to $9.211 million for the three months ended September 30, 2025, up from $3.404 million in the prior year, representing a 170.6% increase. For the nine months ended September 30, 2025, net income surged to $21.867 million, a 266.1% increase from $5.973 million in 2024. Total revenues for the three months ended September 30, 2025, reached $21.736 million, a 35.7% increase from $16.021 million in 2024, driven by a substantial rise in interest income to $18.522 million from $12.629 million. Total assets grew to $1.012 billion as of September 30, 2025, from $844.605 million at December 31, 2024, primarily due to an increase in loans receivable at fair value to $994.838 million from $828.215 million. The company's secured financings, at fair value, also increased to $723.364 million from $619.787 million. Shareholder equity saw a healthy rise to $220.574 million from $161.532 million over the same period, reflecting increased common shares issued and retained earnings. The company continues to focus on originating, acquiring, financing, and managing a portfolio of primarily commercial real estate debt investments, with all outstanding loans measured at fair value.

Why It Matters

This strong performance indicates Starwood Credit Real Estate Income Trust is effectively navigating the current real estate debt market, generating substantial returns for investors. The significant growth in net income and assets, particularly loans receivable, suggests robust demand for their commercial real estate debt investments. For employees, this signals stability and potential growth opportunities within the firm. Customers, primarily borrowers, benefit from a well-capitalized lender. In a competitive landscape, Starwood's ability to increase its loan portfolio and profitability positions it as a formidable player, potentially attracting more capital and deal flow.

Risk Assessment

Risk Level: medium — While net income and assets have grown significantly, the company's substantial reliance on secured financings, which increased to $723.364 million from $619.787 million, introduces interest rate risk. Additionally, the fair value option for all loans means that market fluctuations could rapidly impact reported asset values and net income, as seen with unrealized gains/losses on derivative instruments, which swung from a $1.628 million gain in Q3 2024 to a $980k loss in Q3 2025.

Analyst Insight

Investors should consider adding Starwood Credit Real Estate Income Trust to their portfolios, given the impressive 266.1% year-over-year net income growth and expanding loan portfolio. However, they should closely monitor interest rate trends and the company's hedging strategies due to its significant use of secured financings and fair value accounting for all loans.

Financial Highlights

debt To Equity

3.28

revenue

$21.736M

operating Margin

N/A

total Assets

$1.012B

total Debt

$723.364M

net Income

$9.211M

eps

$0.69

gross Margin

N/A

cash Position

$12.290M

revenue Growth

+35.7%

Revenue Breakdown

Key Numbers

• $21.867M — Net Income (9 months) (Increased 266.1% from $5.973M in 2024)
• $1.012B — Total Assets (Increased from $844.605M at Dec 31, 2024)
• $994.838M — Loans Receivable, at fair value (Increased from $828.215M at Dec 31, 2024)
• $723.364M — Secured Financings, at fair value (Increased from $619.787M at Dec 31, 2024)
• $220.574M — Total Shareholders' Equity (Increased from $161.532M at Dec 31, 2024)
• $18.522M — Interest Income (3 months) (Increased from $12.629M in Q3 2024)
• $53.059M — Interest Income (9 months) (Increased from $25.528M in 2024)
• $9.211M — Net Income (3 months) (Increased 170.6% from $3.404M in Q3 2024)
• 13,086,331 — Weighted-average common shares outstanding, basic (3 months) (Increased from 9,168,764 in Q3 2024)
• $34.144M — Cash paid for interest (9 months) (Increased from $12.290M in 2024)

Key Players & Entities

• Starwood Credit Real Estate Income Trust (company) — Registrant
• Starwood Credit Advisors, L.L.C. (company) — External Advisor
• Starwood Capital Group Holdings L.P. (company) — Sponsor
• U.S. Securities and Exchange Commission (regulator) — Regulatory body
• $9.211 million (dollar_amount) — Net income for Q3 2025
• $3.404 million (dollar_amount) — Net income for Q3 2024
• $21.867 million (dollar_amount) — Net income for nine months ended Sep 30, 2025
• $5.973 million (dollar_amount) — Net income for nine months ended Sep 30, 2024
• $1.012 billion (dollar_amount) — Total assets as of Sep 30, 2025
• $994.838 million (dollar_amount) — Loans receivable at fair value as of Sep 30, 2025

FAQ

Risk Factors

• Credit Risk of Investments [high — financial]: The Trust's investments are primarily in commercial real estate debt. A downturn in the commercial real estate market or an increase in defaults on these loans could materially and adversely affect the Trust's financial condition and results of operations. For the nine months ended September 30, 2025, loans receivable at fair value grew to $994.838M.
• Interest Rate Sensitivity [medium — market]: Changes in interest rates can impact the fair value of the Trust's investments and its borrowing costs. As of September 30, 2025, secured financings were $723.364M, an increase from $619.787M at December 31, 2024, indicating a growing reliance on debt financing which is sensitive to rate fluctuations.
• Regulatory Compliance [medium — regulatory]: As a real estate investment trust, the Trust is subject to various regulatory requirements. Failure to comply with these regulations could result in penalties and affect its ability to operate. The Trust's focus on originating, acquiring, financing, and managing real estate debt investments means it operates within a regulated financial landscape.
• Valuation of Investments [medium — operational]: All outstanding loans are measured at fair value. The methodologies used to determine fair value may be subjective and could be impacted by market conditions, leading to potential volatility in reported asset values. Total assets grew to $1.012B as of September 30, 2025.

Industry Context

The commercial real estate debt market is characterized by its sensitivity to interest rates and economic cycles. Starwood Credit Real Estate Income Trust operates within this space, focusing on originating, acquiring, financing, and managing debt investments. The industry is competitive, with various funds and institutions vying for attractive debt opportunities. Trends include a focus on resilient property types and careful underwriting amidst evolving market conditions.

Regulatory Implications

As a REIT, Starwood Credit Real Estate Income Trust must adhere to specific tax and regulatory requirements to maintain its status. Compliance with securities laws and financial reporting standards is crucial. Any changes in real estate or financial regulations could impact the Trust's operations and profitability.

What Investors Should Do

1. Monitor loan portfolio performance and delinquency rates.
2. Analyze the impact of interest rate changes on net interest margin and asset valuations.
3. Evaluate the growth in secured financings relative to equity growth.
4. Assess the sustainability of revenue and net income growth.

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the 10-Q, showing significant growth in net income, revenue, assets, and equity.
• 2025-12-31: End of Fiscal Year 2024 — Prior period balance sheet comparison point, showing total assets of $844.605M and shareholders' equity of $161.532M.

Glossary

Loans receivable, at fair value

The total amount of money lent out by the Trust that is expected to be repaid, with its value adjusted to reflect current market conditions. (Represents the primary asset class of the Trust, showing significant growth to $994.838M as of September 30, 2025.)

Secured financings, at fair value

Debt obligations of the Trust that are backed by specific assets, with their value adjusted to reflect current market conditions. (Indicates the leverage used by the Trust, which increased to $723.364M as of September 30, 2025.)

Redeemable Common Shares

Shares of common stock that the Trust is obligated to repurchase from shareholders at a future date or upon the occurrence of certain events. (Reflects the structure of the Trust's equity, which can have redemption features impacting liquidity and capital management.)

Weighted-average common shares outstanding, basic

The average number of common shares outstanding during a period, used for calculating earnings per share. (Increased significantly to 13,086,331 for the three months ended September 30, 2025, from 9,168,764 in the prior year, impacting EPS calculations.)

Year-Over-Year Comparison

Starwood Credit Real Estate Income Trust has demonstrated robust growth compared to the prior year. Revenue for the three months ended September 30, 2025, increased by 35.7% to $21.736 million, primarily driven by a 46.7% surge in interest income. Net income saw an even more dramatic increase of 170.6% to $9.211 million. Total assets have grown substantially to $1.012 billion, with loans receivable at fair value increasing to $994.838 million. Shareholder equity also rose significantly to $220.574 million. No new significant risk factors were highlighted in the provided text, suggesting a stable risk profile relative to the previous period, though existing risks related to credit and interest rate sensitivity remain pertinent.

Filing Documents

• ck0001986395-20250930.htm (10-Q) — 3404KB
• ck0001986395-ex10_2.htm (EX-10.2) — 58KB
• ck0001986395-ex31_1.htm (EX-31.1) — 14KB
• ck0001986395-ex31_2.htm (EX-31.2) — 15KB
• ck0001986395-ex32_1.htm (EX-32.1) — 8KB
• ck0001986395-ex32_2.htm (EX-32.2) — 9KB
• img31778579_0.jpg (GRAPHIC) — 4KB
• img31778579_1.jpg (GRAPHIC) — 26KB
• img31778579_2.jpg (GRAPHIC) — 17KB
• img51924707_0.jpg (GRAPHIC) — 10KB
• img52848228_0.jpg (GRAPHIC) — 10KB
• img238162850_0.jpg (GRAPHIC) — 10KB
• img239086371_0.jpg (GRAPHIC) — 10KB
• 0001193125-25-279378.txt ( ) — 13709KB
• ck0001986395-20250930.xsd (EX-101.SCH) — 1411KB
• ck0001986395-20250930_htm.xml (XML) — 3045KB

Financial Statements

Financial Statements 1 Condensed Consolidated Financial Statements (Unaudited): Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 1 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 2 Condensed Consolidated Statements of Changes in Redeemable Common Shares and Shareholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 3 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 5 Notes to Condensed Consolidated Financial Statements 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 39 PART II. OTHER INFORMATION 40 Item 1.

Legal Proceedings

Legal Proceedings 40 Item 1A.

Risk Factors

Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults Upon Senior Securities 41 Item 4. Mine Safety Disclosure 41 Item 5. Other Information 41 Item 6. Exhibits and Financial Statement Schedules 42

FINAN CIAL INFORMATION

PART I. FINAN CIAL INFORMATION

F inancial St atements

Item 1. F inancial St atements Starwood Credit Real Estate Income Trust Condensed Consol idated Balance Sheets (Unaudited) (in thousands, except for share and per share data) September 30, 2025 December 31, 2024 Assets Loans receivable, at fair value $ 994,838 $ 828,215 Cash and cash equivalents 6,391 2,789 Restricted cash 5,310 8,592 Accrued interest receivable 4,806 4,700 Other assets 988 309 Total assets $ 1,012,333 $ 844,605 Liabilities and Equity Secured financings, at fair value $ 723,364 $ 619,787 Subscriptions received in advance 5,310 8,592 Due to advisor 9,804 8,818 Accrued shareholder servicing fees 9,447 7,294 Interest payable 2,392 2,414 Distribution payable 1,996 1,338 Other liabilities 3,719 523 Total liabilities 756,032 648,766 Commitments and contingencies (see note 13) — — Redeemable common shares — Class E shares, par value $ 0.01 per share; 1,690,863 and 1,670,897 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 35,727 34,307 Equity Common shares — Class S shares, par value $ 0.01 per share; 6,811,201 and 5,064,764 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 68 51 Common shares — Class I shares, par value $ 0.01 per share; 4,913,917 and 3,823,418 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 49 38 Additional paid-in capital 219,727 166,938 Retained Earnings (Accumulated deficit) and cumulative distributions 730 ( 5,495 ) Total shareholders' equity 220,574 161,532 Total liabilities, redeemable common shares, and equity $ 1,012,333 $ 844,605 See accompanying notes to the condensed consolidated financial statements 1 Starwood Credit Real Estate Income Trust Condensed Consolidated State ments of Operations (Unaudited) (in thousands, except fo

View Full Filing

View this 10-Q filing on SEC EDGAR