UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 4, 2014
Starwood Property Trust, Inc.
(Exact name of registrant as specified in its charter)
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Maryland
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001-34436
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27-0247747
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591 West Putnam Avenue Greenwich, CT |
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06830 |
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(Address of principal |
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(Zip Code) |
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executive offices) |
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Registrant’s telephone number,
including area code:
(203) 422-7700
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry Into a Material Definitive Agreement.
On December 4, 2014, Starwood Property Trust, Inc. (the “Company”) entered into Amendment No. 2 (the “Amendment”) to the Management Agreement dated as of August 17, 2009 (as amended by Amendment No. 1 to Management Agreement, dated as of May 7, 2012, the “Management Agreement”), between the Company and SPT Management, LLC (the “Manager”) to clarify the calculation of the incentive compensation payable to the Manager as a result of the Company’s spin-off of Starwood Waypoint Residential Trust (“SWAY”) on January 31, 2014.
The definition of “incentive compensation” in the Management Agreement did not include language that accounted for a spin-off. As a result, the Company’s independent directors decided that it was advisable, in order to reflect the original intent of the Management Agreement, for the Company to amend the Management Agreement to revise the definition of “incentive compensation” to account for the spin-off of SWAY when calculating incentive compensation payable to the Manager. Specifically, the Amendment reflects the following revised definition of “incentive compensation” (revisions to the definition are reflected below in the underlined and bold text):
“Incentive Compensation” means the incentive management fee calculated and payable with respect to each calendar quarter (or part thereof that this Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference between (1) the product of (a) 20% and (b) the difference between (i) Core Earnings of the Company for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price per share of the Common Stock of all of the Company’s public offerings of Common Stock multiplied by the weighted average number of shares of Common Stock outstanding (including, for the avoidance of doubt, any restricted shares of Common Stock, restricted stock units or any shares of Common Stock underlying other awards granted under one or more of the Company’s Equity Incentive Plans) in the previous 12-month period and (B) 8%, and (2) the sum of any Incentive Compensation paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that (1) no Incentive Compensation shall be payable with respect to any calendar quarter unless Core Earnings for the 12 most recently completed calendar quarters is greater than zero and (2) for purposes of clause (1)(a)(ii)(A) above, on and after January 31, 2014, the computation of the weighted average issue price per share of the Common Stock shall be decreased to give effect to the book value per share on January 31, 2014 of the assets of the Company’s formerly wholly-owned subsidiary, Starwood Waypoint Residential Trust, which was spun-off on January 31, 2014, and the computation of the average number of shares of Common Stock outstanding shall be decreased by the weighted-average number of shares of Starwood Waypoint Residential Trust distributed in the spin-off on January 31, 2014 .
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
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Description |
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10.1 |
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Amendment No. 2, dated December 4, 2014, to Management Agreement, dated August 17, 2009, as amended, between Starwood Property Trust, Inc. and SPT Management, LLC |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: December 5, 2014 |
STARWOOD PROPERTY TRUST, INC. |
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By: |
/s/ Andrew J. Sossen |
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Name: |
Andrew J. Sossen |
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Title: |
Chief Operating Officer |
Exhibit 10.1
AMENDMENT NO. 2 TO MANAGEMENT AGREEMENT
THIS AMENDMENT NO. 2 TO MANAGEMENT AGREEMENT (this “ Amendment ”) is dated as of December 4, 2014, by and among Starwood Property Trust, Inc., a Maryland corporation (the “ Company ”), and SPT Management, LLC, a Delaware limited liability company (the “ Manager ”).
Capitalized terms used in this Amendment and not otherwise defined shall have the meanings assigned to them in the Agreement (as defined below).
RECITALS
WHEREAS , the Company and the Manager are parties to that certain Management Agreement, dated as of August 17, 2009 (as amended by Amendment No. 1 to Management Agreement, dated as of May 7, 2012, the “ Agreement ”); and
WHEREAS , the Company and the Manager desire to amend, and do hereby amend, the Agreement as set forth herein.
NOW THEREFORE , in consideration of the premises and agreements hereinafter set forth, the parties hereto hereby agree as follows:
1.1 Definition of Incentive Compensation . Section 1(a) of the Agreement is hereby amended and restated by deleting the first paragraph of the definition of Incentive Compensation and replacing it in its entirety with the following:
“ Incentive Compensation ” means the incentive management fee calculated and payable with respect to each calendar quarter (or part thereof that this Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference between (1) the product of (a) 20% and (b) the difference between (i) Core Earnings of the Company for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price per share of the Common Stock of all of the Company’s public offerings of Common Stock multiplied by the weighted average number of shares of Common Stock outstanding (including, for the avoidance of doubt, any restricted shares of Common Stock, restricted stock units or any shares of Common Stock underlying other awards granted under one or more of the Company’s Equity Incentive Plans) in the previous 12-month period and (B) 8%, and (2) the sum of any Incentive Compensation paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that (1) no Incentive Compensation shall be payable with respect to any calendar quarter unless Core Earnings for the 12 most recently completed calendar quarters is greater than zero and (2) for purposes of clause (1)(a)(ii)(A) above, on and after January 31, 2014, the computation of the weighted average issue price per share of the Common Stock shall be decreased to give effect to the book value per share on January 31, 2014 of the assets of the Company’s formerly wholly-owned subsidiary, Starwood Waypoint Residential Trust, which was spun-off on January 31, 2014, and the computation of the average number of shares of Common Stock outstanding shall be decreased by the
weighted-average number of shares of Starwood Waypoint Residential Trust distributed in the spin-off on January 31, 2014.
1.2 Representations and Warranties .
(a) The Company represents and warrants to the Manager that this Amendment: (i) has been duly and validly executed and delivered by the Company; and (ii) constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws and equitable principles related to or limiting creditors’ rights generally and by general principles of equity.
(b) The Manager represents and warrants to the Company that this Amendment: (i) has been duly and validly executed and delivered by the Manager; and (ii) constitutes the legal, valid and binding obligation of the Manager, enforceable against the Manager in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws and equitable principles related to or limiting creditors’ rights generally and by general principles of equity.
1.3 Ratification of Agreement . Except as expressly provided in this Amendment, all of the terms, covenants, and other provisions of the Agreement are hereby ratified and confirmed and shall continue to be in full force and effect in accordance with their respective terms.
1.4 Miscellaneous Provisions . The provisions of Section 16 ( Miscellaneous ) of the Agreement shall apply mutatis mutandis to this Amendment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the date first written above.
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Starwood Property Trust, Inc. |
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By |
/s/ Andrew J. Sossen |
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Name: Andrew J. Sossen |
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Title: Chief Operating Officer and General Counsel |
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SPT Management, LLC |
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By |
/s/ Barry S. Sternlicht |
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Name: Barry S. Sternlicht |
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Title: Authorized Signatory |
Signature Page to Amendment No. 2 to Management Agreement