STARWOOD PROPERTY TRUST INC

Previous wording

•Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.

Current wording

•Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized and to be stabilized commercial real estate properties, including multifamily properties, that are held for investment.

Previous wording

•Obtained one new special servicing assignment for a CMBS trust with a total unpaid principal balance of $1.1 billion, while $3.7 billion matured, bringing our total named special servicing portfolio to $96.1 billion.

Current wording

•Obtained one new special servicing assignment for a CMBS trust with a total unpaid principal balance of $1.1 billion, while $3.7 billion matured, bringing our total named special servicing portfolio to $96.1 billion as of March 31, 2024.

Previous wording

Refer to Note 24 to the Condensed Consolidated Financial Statements for disclosure regarding significant transactions that occurred subsequent to March 31, 2024.

Current wording

Refer to Note 24 to the Consolidated Financial Statements for disclosure regarding significant transactions that occurred subsequent to June 30, 2024.

Previous wording

The following table compares our summarized results of operations for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023 by business segment (amounts in thousands):

Current wording

The following table compares our summarized results of operations for the three months ended June 30, 2024 and March 31, 2024 and for the six months ended June 30, 2024 and 2023 by business segment (amounts in thousands):

Previous wording

For the three months ended March 31, 2024, net interest income of our Commercial and Residential Lending Segment increased $8.0 million to $189.7 million, compared to $181.7 million for the three months ended March 31, 2023. This increase reflects a net increase in interest income, partially offset by the increase in interest expense on our secured financing facilities, both as discussed in the sections above.

Current wording

For the three months ended June 30, 2024, net interest income of our Commercial and Residential Lending Segment decreased $18.1 million to $171.6 million, compared to $189.7 million for the three months ended March 31, 2024. This decrease reflects the decrease in interest income, partially offset by the decrease in interest expense on our secured financing facilities, both as discussed in the sections above.

Previous wording

For the three months ended March 31, 2024, the weighted average unlevered yield on our commercial loans decreased slightly primarily due to lower average interest rate spreads. The weighted average unlevered yield on our residential loans decreased primarily due to prepayments of higher rate loans.

Current wording

For the three months ended June 30, 2024, the weighted average unlevered yield on our commercial loans decreased primarily due to lower prepayment related income. The weighted average unlevered yield on our residential loans was relatively unchanged.

Previous wording

During both the three months ended March 31, 2024 and December 31, 2023, the Commercial and Residential Lending Segment’s weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 7.6%. Interest rate hedges had the effect of reducing these weighted average borrowing costs to 6.7% and 6.8% during the three months ended March 31, 2024 and December 31, 2023, respectively.

Current wording

During both the three months ended June 30, 2024 and March 31, 2024, the Commercial and Residential Lending Segment’s weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees was 7.6%. Interest rate hedges had the effect of reducing these weighted average borrowing costs to 6.7% during both the three months ended June 30, 2024 and March 31, 2024, respectively.

Previous wording

For the three months ended March 31, 2024, other income of our Commercial and Residential Lending Segment increased $49.8 million to income of $26.4 million compared to a loss of $23.4 million for the three months ended December 31, 2023. This increase was primarily due to (i) a $268.8 million favorable change in gain (loss) on derivatives and (ii) the nonrecurrence of $101.1 million of property impairment losses recognized in the fourth quarter of 2023, both partially offset by (iii) a $191.9 million unfavorable change in fair value of residential loans and (iv) a $120.6 million unfavorable change in foreign currency gain (loss). The favorable change in gain (loss) on derivatives in the first quarter of 2024 reflects a $137.2 million favorable change on interest rate swaps principally related to residential loans, which partially offsets the unfavorable change in fair value of those loans, and a $131.6 million favorable change in gain (loss) on foreign currency hedges. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the pound sterling (“GBP”), Euro (“EUR”) and Australian dollar (“AUD”), in the first quarter of 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a strengthening against the AUD, in the fourth quarter of 2023.

Current wording

For the three months ended June 30, 2024, other income of our Commercial and Residential Lending Segment increased $36.2 million to $62.6 million compared to $26.4 million for the three months ended March 31, 2024. This increase was primarily due to (i) an $88.4 million favorable change in fair value of residential loans and (ii) a $48.7 million favorable change in foreign currency gain (loss), partially offset by (iii) a $101.8 million decreased gain on derivatives. The decreased gain on derivatives in the second quarter of 2024 reflects a $52.9 million decreased gain on interest rate swaps principally related to residential loans, which partially offsets the favorable change in fair value of those loans, and a $48.9 million unfavorable change in gain (loss) on foreign currency hedges. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The favorable change in foreign currency gain (loss) and the unfavorable change in gain (loss) on foreign currency hedges reflect the weakening of the U.S. dollar against the pound sterling (“GBP”) and Australian dollar (“AUD”), partially offset by a strengthening against the Euro (“EUR”), in the second quarter of 2024, compared to a strengthening of the U.S. dollar against each of those currencies in the first quarter of 2024.

Previous wording

For the three months ended March 31, 2024, revenues of our Infrastructure Lending Segment increased $2.5 million to $66.9 million, compared to $64.4 million for the three months ended December 31, 2023. This was primarily due to an increase in interest income from loans of $2.5 million reflecting higher average loan balances and prepayment related income.

Current wording

For the three months ended June 30, 2024, revenues of our Infrastructure Lending Segment decreased $1.7 million to $65.2 million, compared to $66.9 million for the three months ended March 31, 2024. This was primarily due to a decrease in interest income from loans of $2.2 million reflecting lower average loan balances and interest rates, the effects of which were partially offset by higher prepayment related income.

Previous wording

For the three months ended March 31, 2024, costs and expenses of our Infrastructure Lending Segment increased $3.2 million to $45.8 million, compared to $42.6 million for the three months ended December 31, 2023. The increase was primarily due to increases of $1.9 million in general and administrative expenses and $1.1 million in interest expense associated with the various secured financing facilities used to fund this segment’s investment portfolio. The increase in interest expense was primarily due to higher average borrowings outstanding.

Current wording

For the three months ended June 30, 2024, costs and expenses of our Infrastructure Lending Segment decreased $4.0 million to $41.8 million, compared to $45.8 million for the three months ended March 31, 2024. The decrease was primarily due to decreases of $1.7 million in general and administrative expenses, $1.2 million in credit loss provision and $1.1 million in interest expense associated with the various secured financing facilities used to fund this segment’s investment portfolio. The decrease in interest expense was primarily due to lower average borrowings outstanding.

Previous wording

For the three months ended March 31, 2024, net interest income of our Infrastructure Lending Segment increased $1.4 million to $27.6 million, compared to $26.2 million for the three months ended December 31, 2023. The increase reflects the increase in interest income, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.

Current wording

For the three months ended June 30, 2024, net interest income of our Infrastructure Lending Segment decreased $1.1 million to $26.5 million, compared to $27.6 million for the three months ended March 31, 2024. The decrease reflects the decrease in interest income, partially offset by the decrease in interest expense on the secured financing facilities, both as discussed in the sections above.

Previous wording

During both the three months ended March 31, 2024 and December 31, 2023, the weighted average unlevered yield on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, was 10.4%.

Current wording

During the three months ended June 30, 2024 and March 31, 2024, the weighted average unlevered yield on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, was 10.3% and 10.4%, respectively.

Previous wording

During both the three months ended March 31, 2024 and December 31, 2023, the Infrastructure Lending Segment’s weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 8.0%.

Current wording

During the three months ended June 30, 2024 and March 31, 2024, the Infrastructure Lending Segment’s weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 8.0% in each period.

Previous wording

For the three months ended March 31, 2024, revenues of our Property Segment decreased $2.2 million to $20.9 million for the three months ended March 31, 2024, compared to $23.1 million for the three months ended December 31, 2023. The decrease is primarily due to the sale of the Master Lease Portfolio on February 29, 2024 (see Note 3 to the Condensed Consolidated Financial Statements).

Current wording

For the three months ended June 30, 2024, revenues of our Property Segment decreased $4.9 million to $16.0 million for the three months ended June 30, 2024, compared to $20.9 million for the three months ended March 31, 2024. The decrease is primarily due to the sale of the Master Lease Portfolio on February 29, 2024 (see Note 3 to the Condensed Consolidated Financial Statements).

Previous wording

For the three months ended March 31, 2024, costs and expenses of our Property Segment decreased $3.0 million to $26.1 million, compared to $29.1 million for the three months ended December 31, 2023, primarily due to the sale of the Master Lease Portfolio on February 29, 2024.

Current wording

For the three months ended June 30, 2024, costs and expenses of our Property Segment decreased $1.7 million to $24.4 million, compared to $26.1 million for the three months ended March 31, 2024, primarily due to the sale of the Master Lease Portfolio on February 29, 2024.

Previous wording

For the three months ended March 31, 2024, other income of our Property Segment increased $90.2 million to $102.0 million, compared to $11.8 million for the three months ended March 31, 2023. The increase is primarily due to (i) a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024 and (ii) a $2.9 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio, partially offset by a $3.5 million decrease in income attributable to investments of the Woodstar Fund.

Current wording

For the three months ended June 30, 2024, other income of our Property Segment decreased $96.6 million to $5.4 million compared to $102.0 million for the three months ended March 31, 2024. The decrease is primarily due to (i) the nonrecurrence of a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024, (ii) a $3.0 million decrease in income attributable to investments of the Woodstar Fund and (iii) a $1.5 million decreased gain on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio.

Previous wording

For the three months ended March 31, 2024, revenues of our Investing and Servicing Segment decreased $6.4 million to $42.1 million, compared to $48.5 million for the three months ended December 31, 2023. The decrease in revenues is primarily due to a $4.1 million decrease in interest income from conduit loans and CMBS investments and a $1.4 million decrease in servicing fees.

Current wording

For the three months ended June 30, 2024, revenues of our Investing and Servicing Segment increased $13.5 million to $55.6 million, compared to $42.1 million for the three months ended March 31, 2024. The increase in revenues is primarily due to a $7.0 million increase in servicing fees and a $5.3 million increase in interest income from CMBS investments and conduit loans. The increase in servicing fees is primarily due to higher loan modification and assumption fees. The increase in interest income is primarily due to higher interest recoveries on CMBS investments and higher average conduit loan balances due to increased origination and securitization activity.

Previous wording

For the three months ended March 31, 2024, corporate other income decreased $26.0 million to a loss of $13.9 million, compared to income of $12.1 million for the three months ended December 31, 2023. This was due to an unfavorable change in gain (loss) on our fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.

Current wording

For the three months ended June 30, 2024, corporate other loss decreased $4.7 million to $9.2 million, compared to $13.9 million for the three months ended March 31, 2024. This was due to a decreased loss on our fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.

Previous wording

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in taxable REIT subsidiaries (“TRSs”). For the three months ended March 31, 2024, our income tax provision decreased $17.1 million to $1.2 million compared to $18.3 million for the three months ended December 31, 2023 due to lower taxable income of our TRSs in the first quarter of 2024 compared to the fourth quarter of 2023.

Current wording

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in taxable REIT subsidiaries (“TRSs”). For the three months ended June 30, 2024, our income tax provision increased $14.7 million to $15.9 million compared to $1.2 million for the three months ended March 31, 2024 due to higher taxable income of our TRSs in the second quarter of 2024 compared to the first quarter of 2024.

Previous wording

During the three months ended March 31, 2024, net income attributable to non-controlling interests decreased $8.2 million to $5.5 million, compared to $13.7 million during the three months ended December 31, 2023. The decrease was primarily due to non-controlling interests in decreased income of the Woodstar Fund and a consolidated CMBS joint venture in the first quarter of 2024.

Current wording

During the three months ended June 30, 2024, net income attributable to non-controlling interests decreased $5.7 million to a loss attributable to non-controlling interests of $0.2 million, compared to income attributable to non-controlling interests of $5.5 million during the three months ended March 31, 2024. The decrease was primarily due to non-controlling interests in increased losses of a consolidated CMBS joint venture in the second quarter of 2024.

Previous wording

For the three months ended March 31, 2024, costs and expenses of our Commercial and Residential Lending Segment increased $3.5 million to $292.8 million, compared to $289.3 million for the three months ended December 31, 2023. This increase was primarily due to increases of $9.7 million in the credit loss provision and $3.2 million in general and administrative expenses, partially offset by a $10.4 million decrease in interest expense associated with the various secured financing facilities used to fund a portion of this segment’s investment portfolio. The increase in the credit loss provision was primarily due to us selecting the most unfavorable modeled macroeconomic forecast for office and retail loans in the first quarter of 2024. The decrease in interest expense was primarily due to lower average borrowings outstanding due to paydowns from excess cash balances.

Current wording

For the six months ended June 30, 2024, costs and expenses of our Commercial and Residential Lending Segment decreased $86.4 million to $575.9 million, compared to $662.3 million for the six months ended June 30, 2023. This decrease was primarily due to decreases of $71.0 million in credit loss provision and $24.1 million in interest expense associated with the various secured financing facilities used to fund a portion of this segment’s investment portfolio, partially offset by an $8.1 million increase in general and administrative expenses, primarily for compensation and professional fees. The decrease in credit loss provision was primarily due to a lesser deterioration in modeled macroeconomic forecasts in the first half of 2024 compared to the first half of 2023, despite us selecting the most unfavorable modeled macroeconomic forecast for office and retail loans in the first half of 2024. The decrease in interest expense was primarily due to lower average borrowings outstanding due to paydowns from net loan repayments and excess cash balances, partially offset by the effect of higher average index rates.

Previous wording

During the three months ended March 31, 2024 and 2023, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities, excluding retained RMBS and loans for which interest income is not recognized, were as follows:

Current wording

During the six months ended June 30, 2024 and 2023, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities, excluding retained RMBS and loans for which interest income is not recognized, were as follows:

Previous wording

The weighted average unlevered yield on our commercial loans increased primarily due to higher average index rates and prepayment related income. The unlevered yield on our residential loans increased primarily due to a decline in fair value of the residential loans.

Current wording

The weighted average unlevered yield on our commercial loans increased primarily due to higher average index rates and prepayment related income. The unlevered yield on our residential loans increased slightly.

Previous wording

During the three months ended March 31, 2024 and 2023, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 7.6% and 6.7%, respectively. The increase in borrowing rates primarily reflects higher average index rates. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 6.7% and 6.2% during the three months ended March 31, 2024 and 2023, respectively.

Current wording

During the six months ended June 30, 2024 and 2023, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 7.6% and 7.2%, respectively. The increase in borrowing rates primarily reflects higher average index rates. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 6.7% and 6.4% during the six months ended June 30, 2024 and 2023, respectively.

Previous wording

For the three months ended March 31, 2024, other income of our Commercial and Residential Lending Segment increased $24.4 million to $26.4 million, compared to $2.0 million for the three months ended March 31, 2023. This increase primarily reflects (i) a $145.3 million favorable change in gain (loss) on derivatives and (ii) a $6.4 million increase in earnings from unconsolidated entities primarily due to an observable price change in an equity investment, partially offset by (iii) a $56.7 million unfavorable change in foreign currency gain (loss), (iv) a $48.9 million unfavorable change in fair value of residential loans and (v) a $21.9 million unfavorable change in fair value of primarily RMBS investment securities. The favorable change in gain (loss) on derivatives during the three months ended March 31, 2024 reflects (i) an $86.8 million favorable change in gain (loss) on interest rate swaps principally related to residential loans, which more than offsets the decrease in fair value of those loans, and (ii) a $58.5 million favorable change in gain (loss) on foreign currency hedges. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the GBP, EUR and AUD during the first quarter of 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a strengthening against the AUD, in the first quarter of 2023.

Current wording

For the six months ended June 30, 2024, other income of our Commercial and Residential Lending Segment increased $61.4 million to $89.0 million, compared to $27.6 million for the six months ended June 30, 2023. This increase primarily reflects (i) an $87.1 million increased gain on derivatives, (ii) a $64.0 million favorable change in fair value of residential loans, (iii) the non-recurrence of a $23.8 million impairment loss on a foreclosed vacant building in the first half of 2023 and (iv) a $6.6 million increase in earnings from unconsolidated entities primarily due to an observable price change in an equity investment, partially offset by (v) a $73.2 million unfavorable change in foreign currency gain (loss) and (vi) a $48.6 million unfavorable change in fair value of primarily RMBS investment securities. The increased gain on derivatives during the six months ended June 30, 2024 reflects (i) a $77.5 million favorable change in gain (loss) on foreign currency hedges and (ii) a $9.6 million increased gain on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the GBP, EUR and AUD during the first half of 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a strengthening against the AUD, in the first half of 2023.

Previous wording

For the three months ended March 31, 2024, revenues of our Infrastructure Lending Segment increased $10.6 million to $66.9 million, compared to $56.3 million for the three months ended March 31, 2023. This increase was primarily due to an increase in interest income from loans of $11.6 million, principally due to higher average loan balances and index rates, partially offset by a $1.2 million decrease in interest income from investment securities, primarily due to lower average balances resulting from repayments.

Current wording

For the six months ended June 30, 2024, revenues of our Infrastructure Lending Segment increased $15.8 million to $132.2 million, compared to $116.4 million for the six months ended June 30, 2023. This increase was primarily due to (i) an increase in interest income from loans of $16.3 million, principally due to higher average index rates, average loan balances, and prepayment related income, partially offset by (ii) a $1.2 million decrease in interest income from investment securities, primarily due to lower average balances resulting from repayments.

Previous wording

For the three months ended March 31, 2024, costs and expenses of our Infrastructure Lending Segment decreased $3.4 million to $45.8 million, compared to $49.2 million for the three months ended March 31, 2023. The decrease was primarily due to (i) an $11.5 million decrease in credit loss provision, partially offset by (ii) a $6.2 million increase in interest expense associated with the various secured financing facilities used to fund this segment’s investment portfolio and (iii) a $2.0 million increase in general and administrative expenses, primarily for compensation and professional fees. The decrease in the credit loss provision was primarily due to specific allowances for a credit-deteriorated loan and investment security provided during the first quarter of 2023. The increase in interest expense was primarily due to higher average index rates and borrowings outstanding.

Current wording

For the six months ended June 30, 2024, costs and expenses of our Infrastructure Lending Segment decreased $4.6 million to $87.6 million, compared to $92.2 million for the six months ended June 30, 2023. The decrease was primarily due to (i) a $15.6 million decrease in credit loss provision, partially offset by (ii) an $8.5 million increase in interest expense associated with the various secured financing facilities used to fund this segment’s investment portfolio and (iii) a $2.5 million increase in general and administrative expenses, primarily for compensation and professional fees. The decrease in the credit loss provision was primarily due to the nonrecurrence of specific allowances for a credit-deteriorated loan and investment security provided during the first half of 2023. The increase in interest expense was primarily due to higher average index rates and borrowings outstanding.

Previous wording

For the three months ended March 31, 2024, net interest income of our Infrastructure Lending Segment increased $4.3 million to $27.6 million, compared to $23.3 million for the three months ended March 31, 2023. The increase reflects the net increase in interest income, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.

Current wording

For the six months ended June 30, 2024, net interest income of our Infrastructure Lending Segment increased $6.5 million to $54.0 million, compared to $47.5 million for the six months ended June 30, 2023. The increase reflects the net increase in interest income, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.

Previous wording

During the three months ended March 31, 2024 and 2023, the weighted average unlevered yields on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, were 10.4% and 9.4%, respectively, primarily reflecting higher average index rates in the first quarter of 2024.

Current wording

During the six months ended June 30, 2024 and 2023, the weighted average unlevered yields on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, were 10.5% and 9.7%, respectively, primarily reflecting higher average index rates in the first half of 2024.

Previous wording

During the three months ended March 31, 2024 and 2023, the Infrastructure Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 8.0% and 7.1%, respectively.

Current wording

During the six months ended June 30, 2024 and 2023, the Infrastructure Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 8.0% and 7.3%, respectively.

Previous wording

For the three months ended March 31, 2024 and 2023, other income of our Infrastructure Lending Segment decreased $2.0 million to a loss of $0.2 million, compared to income of $1.8 million for the three months ended March 31, 2023. The decrease primarily reflects a $1.4 million decrease in earnings from unconsolidated entities and a $0.6 million loss on extinguishment of debt in the first quarter of 2024.

Current wording

For the six months ended June 30, 2024 and 2023, other income of our Infrastructure Lending Segment decreased $4.3 million to a loss of $0.2 million, compared to income of $4.1 million for the six months ended June 30, 2023. The decrease primarily reflects a $3.5 million decrease in earnings from unconsolidated entities and a $0.6 million loss on extinguishment of debt in the first half of 2024.

Previous wording

For the three months ended March 31, 2024, costs and expenses of our Property Segment decreased $1.1 million to $26.1 million, compared to $27.2 million for the three months ended March 31, 2023. The decrease is primarily due to the sale of our Master Lease Portfolio on February 29, 2024, partially offset by an increase of $1.5 million in interest expense reflecting higher index rates on variable rate borrowings of the Medical Office Portfolio.

Current wording

For the six months ended June 30, 2024, costs and expenses of our Property Segment decreased $4.7 million to $50.5 million, compared to $55.2 million for the six months ended June 30, 2023. The decrease is primarily due to the sale of our Master Lease Portfolio on February 29, 2024, partially offset by an increase of $1.9 million in interest expense of the Medical Office Portfolio, reflecting higher index rates on variable rate borrowings.

Previous wording

For the three months ended March 31, 2024, other income of our Property Segment increased $66.8 million to $102.0 million compared to $35.2 million for the three months ended December 31, 2023. The increase is primarily due to (i) a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024 and (ii) a $4.1 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio, partially offset by (iii) a $28.1 million decrease in income attributable to investments of the Woodstar Fund, mainly reflecting lower unrealized increases in fair value during the first quarter of 2024.

Current wording

For the six months ended June 30, 2024, other income of our Property Segment decreased $133.3 million to $107.4 million, compared to $240.7 million for the six months ended June 30, 2023. The decrease is primarily due to (i) a $220.9 million decrease in income attributable to investments of the Woodstar Fund due to lower unrealized increases in fair value and (ii) a $1.9 million decreased gain on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio, partially offset by (iii) a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024.

Previous wording

For the three months ended March 31, 2024, revenues of our Investing and Servicing Segment increased $1.9 million to $42.1 million, compared to $40.2 million for the three months ended March 31, 2023. The increase in revenues was primarily due to a $3.2 million increase in servicing fees principally related to loan modifications, partially offset by a $2.1 million decrease in rental revenues due to fewer operating properties held.

Current wording

For the six months ended June 30, 2024, revenues of our Investing and Servicing Segment increased $16.8 million to $97.7 million, compared to $80.9 million for the six months ended June 30, 2023. The increase in revenues is primarily due to (i) a $13.8 million increase in servicing fees principally related to loan modifications and assumptions and (ii) a $5.8 million increase in interest income primarily due to higher average conduit loan balances due to increased origination and securitization activity and higher interest recoveries on CMBS investments, partially offset by (iii) a $3.4 million decrease in rental revenues due to fewer operating properties held.

Previous wording

For the three months ended March 31, 2024, costs and expenses of our Investing and Servicing Segment increased $2.2 million to $36.1 million, compared to $33.9 million for the three months ended March 31, 2023. The increase in costs and expenses primarily reflects a $3.4 million increase in general and administrative expense, principally reflecting increased incentive compensation due to higher loan securitization volume, partially offset by a $1.1 million decrease in cost of rental operations due to fewer operating properties held.

Current wording

For the six months ended June 30, 2024, costs and expenses of our Investing and Servicing Segment increased $4.1 million to $73.4 million, compared to $69.3 million for the six months ended June 30, 2023. The increase in costs and expenses primarily reflects a $6.5 million increase in general and administrative expense, principally reflecting increased incentive compensation due to higher loan securitization volume, partially offset by a $3.0 million decrease in depreciation and other costs of rental operations due to fewer operating properties held.

Previous wording

For the three months ended March 31, 2024, other income of our Investing and Servicing Segment decreased $26.8 million to a loss of $4.8 million, compared to income of $22.0 million for the three months ended December 31, 2023. The decrease in other income was primarily due to (i) an $11.0 million lesser increase in fair value of conduit loans, (ii) a $10.8 million greater decrease in fair value of CMBS investments, (iii) the nonrecurrence of a $10.2 million gain on sale of our interest in an operating property in the fourth quarter of 2023 and (iv) a $6.5 million unfavorable change in fair value of servicing rights, all partially offset by (v) an $11.8 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.

Current wording

For the six months ended June 30, 2024, other loss of our Investing and Servicing Segment increased $8.2 million to $9.7 million, compared to $1.5 million for the six months ended June 30, 2023. The increase in other loss was primarily due to (i) a $14.7 million greater decrease in fair value of CMBS investments, (ii) a $7.1 million decrease in earnings from unconsolidated entities and (iii) the nonrecurrence of a $4.8 million gain on sale of an operating property in the first half of 2023, partially offset by (iv) a $15.9 million greater increase in fair value of conduit loans and (v) a $3.4 million increased gain on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.

Previous wording

For the three months ended March 31, 2024, corporate expenses increased $7.9 million to $108.7 million, compared to $100.8 million for the three months ended March 31, 2023. This increase was primarily due to (i) a $6.5 million increase in management fees, primarily reflecting higher incentive fees, and (ii) a $3.2 million increase in interest expense reflecting higher average unsecured borrowings outstanding, as well as higher index rates on our secured term loans, partially offset by (iii) a $2.1 million decrease in general and administrative expenses.

Current wording

For the six months ended June 30, 2024, corporate expenses increased $23.3 million to $213.5 million, compared to $190.2 million for the six months ended June 30, 2023. This increase was primarily due to (i) a $17.9 million increase in interest expense reflecting higher average unsecured borrowings outstanding and higher index rates on our secured term loans and (ii) a $6.1 million increase in management fees, primarily reflecting higher incentive fees.

Previous wording

For the three months ended March 31, 2024, corporate other income decreased $20.2 million to a loss of $13.9 million, compared to income of $6.3 million for the three months ended March 31, 2023. This was due to an unfavorable change in gain (loss) on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.

Current wording

For the six months ended June 30, 2024, corporate other loss increased $9.2 million to $23.0 million, compared to $13.8 million for the six months ended June 30, 2023. This was due to an increased loss on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.

Previous wording

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in TRSs. For the three months ended March 31, 2024, our income taxes increased $10.0 million to a provision of $1.2 million, compared to a benefit of $8.8 million for the three months ended March 31, 2023 due to taxable income of our TRSs in the first quarter of 2024 compared to tax losses in the first quarter of 2023 primarily attributable to net unrealized losses on our residential loans and related interest rate derivatives.

Current wording

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in TRSs. For the six months ended June 30, 2024, our income taxes increased $24.7 million to a provision of $17.1 million, compared to a benefit of $7.6 million for the six months ended June 30, 2023 due to taxable income of our TRSs in the first half of 2024 compared to tax losses in the first half of 2023 primarily attributable to unrealized fair value changes in our residential loans and related interest rate derivatives.

Previous wording

As noted above, the definition of Distributable Earnings allows management to make adjustments, subject to the approval of a majority of our independent directors. This is done in situations where such adjustments are considered appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. No adjustments to the definition of Distributable Earnings became effective during the three months ended March 31, 2024.

Current wording

As noted above, the definition of Distributable Earnings allows management to make adjustments, subject to the approval of a majority of our independent directors. This is done in situations where such adjustments are considered appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. No adjustments to the definition of Distributable Earnings became effective during the six months ended June 30, 2024.