Good day, everyone, and welcome to the Starwood Property Trust Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Andrew Sossen, Chief Operating Officer and General Counsel. Please go ahead, sir.

Thank you very much, and good morning, everybody. Welcome to Starwood Property Trust Third Quarter 2012 Conference Call. This morning, we released our financial results for the quarter ended September 30, 2012, and filed our Form 10-Q with the Securities and Exchange Commission. These documents are available in the Investor Relations section of our website at www.starwoodpropertytrust.com. Before the call begins, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. I refer you to the company's filings made with the SEC for a more detailed discussion of the risks and factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. The company undertakes no duty to update any forward-looking statements that may be made during the course of this call. Additionally, certain non-GAAP financial measures will be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through our company's filings with the SEC at www.sec.gov. Joining me on the call today are Barry Sternlicht, the company's Chief Executive Officer; Stew Ward, the company's Chief Financial Officer; Boyd Fellows, the company's President; and Mike Berry, the company's Chief Accounting Officer. With that, I'm now going to turn the call over to Stew.

Thank you, Andrew, and good morning. This is Stew Ward, Chief Financial Officer of Starwood Property Trust. This morning, I'll be reviewing Starwood Property Trust's financial results for the third quarter 2012. I'll also highlight several items pertinent to both the third and fourth quarters, as well as our overall business. Following my comments, Barry will discuss current market conditions, the state of our business and the opportunities we see as we look forward. For the third quarter of 2012, we reported Core Earnings of $58.7 million, 16% above the $50.4 million posted for the second quarter of 2012. On a per share basis, this translates to $0.50 per diluted share, again, significantly above the $0.45 per share reported for the fourth quarter of 2012. This quarter-to-quarter increase is a result of a combination of both improvements in net interest margin, as well as gains associated with the sale of securities. Importantly, net interest margin, excluding onetime items, increased 7% to $60.5 million from $56.6 million for the prior quarter. This improvement reflects the effect of the very robust third quarter investment activity I'll discuss shortly. As of September 30, 2012, the fair value of our net assets was $20.13 per diluted share. For the same date, GAAP book value per diluted share was $19.56. On a pro forma basis, adjusting for the effect of the $418 million capital raise we completed last month, these figures increased to $20.48 per share and $19.98 per share, respectively. Both of these figures represent our highest level since the inception of the REIT. The primary drivers for these increases are the improvements in asset valuation associated with the continued improvement in the credit market, as well as the accretive impact of our most recent equity raise. Now let me outline some of the…

Thanks, Stew. I guess I would say good morning, everyone. I guess it's the day after, and those of you who were looking for change, my condolences. I guess I think -- I'm thinking about the implications on the credit market of the election and the rally in the treasury this morning and implications for growth for the country because it is going to affect credit spreads and interest rate over the near term and maybe over the whole term of the next 4 years. So in the aftermath of the day after, I would say that the company had a pretty good quarter, I mean, very solid quarter. We've started out in the business saying we'd predicable, consistent and transparent, and we remain predicable, consistent and transparent. We try not to surprise our shareholder base and quote me on how things are going. I mean, you saw huge rally in the credit market from the heels of Bernanke's re-election campaign for Obama, which was QE3 and the rise in the equity markets and then a rally across the whole credit complex and RMBS and CMBS. And obviously, our book should have increased in value consistent with that. We don't really market like that. So where we market our fair market value is really the public bonds we own, which are actively traded and hit near par executions or hit par this quarter after the credit rally. I think on a standalone basis, as STWD is now the largest real estate lenders in the nation. I look at the loan originations of banks and companies like CapSource that are out there and some investments we have in the banking sector. And originating $500 million or $600 million a quarter makes you a pretty material lender in today's real estate market.…

[Operator Instructions] Our first question comes from Gabe Poggi with FBR. Gabriel J. Poggi - FBR Capital Markets & Co., Research Division: Barry, you hit most of my questions. At just kind of a 20,000-foot level, you're seeing some, I'll want to say competitors, but other kind of structured finance entities do some securitization. And I know you guys have talked about it in the past. Just kind of what your thoughts there are considering we're going to be arguably in a tighter credit spread environment, which is good for the liability side of securitization, how you guys are thinking about that going forward would be helpful.

Yes, thanks, Gabe. Funny you mentioned that because I challenge the board with that comment like every 2 weeks. We should be packaging our seniors and selling them the securitization ourselves. And that was the evolution of the market pre the crisis. And obviously, the question of how we're going to get a superior execution. And we have aggregate enough facility, but it's interesting that we're working on renegotiating some of our credit facilities because the largest one we have is the original credit facility from August of '09 that had a credit spread that was written in August of '09. And obviously, there's no way on earth that's the right credit spread today for us. Now to get -- it's an unusual line. It has duration and some other nice features to it, which is very uncommon. I think is almost a 5-year facility. But we're doing that. The team is working on having discussions with the lender. I would love to see us do these securitizations of our seniors and do our own trust, if you will. We're certainly large enough. And on the other hand, if we can get better executions to selling senior off to a life company, then that's a nice, simple way to go. I mean, in a way, we do need to continue to drive down the cost of our financing of the seniors, the As [ph]. And that's obviously, now of avenue that's open to us, which was not 9 months ago. So we're watching. A lot of the deals getting done are quick-pay deals. They're MPLs with fast pay. Their defective duration of the paper is short, less than 18 months or 2 years max, something like 4% coupon. But the effective leverage of that is not what we need. We…

[Operator Instructions] Our next question comes from Joshua Barber with Stifel, Nicolaus. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: Most of my questions have been answered. Just one quick one, Barry. You made the comments about REIT continuing to stay low and what that eventually does to cap rates and debt costs. Can you talk about how your underwriting exit cap rates, especially as it comes to longer-term loans -- you talked about getting some extra security. But where do you -- how much above market are you guys putting exit cap rates for your longer-duration assets today?

It's going to be asset by asset. And it depends on the duration of the transaction. I think we're not assuming cap rates compressed in our underwriting. In many cases, we're probably widening them out 50 basis points. It's really -- one of the things we do is -- and it's interesting. I do think that was helping us, is our equity background net lending with Boyd's team debt background in structuring and credit analysis because we're in these markets all the time. We've equity shopped and invested $2.5 billion this year, total cost, so we -- in 18 transactions. So we kind of know what's going on in these markets all the time. And an office building in New York will take the Times Square transaction retail, which is what that property will be and the billboard, which will drive significant income. And there's a hotel pack, but we'll leave that out. The retail component, if we trade probably sub 5 caps today, probably around 4, you won't actually know where the cap rate be until you see the nature of the leases and how the duration steps, other situations, other nuances in the lease terms. But you've seen comparable trade for sub 4. You're seeing so much money from offshore investors that look at a 10-year treasury that was 1.7 yesterday but probably 1.55 today or something like that. And they're looking at an equity, 3.5, 4 yield as compelling because they own a lot of treasury. In that case, our residual cap rate, and I'm going to make this up, in a 5 cap, create $1 billion valuation. Our loan is 4.75. So we're guessing what the income would be. It's an educated guess, but 3 to 5 cap, not a 4 cap. The borrower thinks he's…

No, there was a sale of one of the mortgage notes on one of our hotel portfolio papers, CMBS. And there was little RMBS.

A little RMBS. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Can you guys also talk about just the transitional market broadly? Are you seeing a lot more players coming into that? Are you seeing a lot more demand for just maybe light transitional assets that you know are starting to get financed, debt that may not have been available 12, 18 months ago but [indiscernible]?

[indiscernible] There definitely are more players in that space. But there are also more guys -- there's more activity in terms of people buying assets. That market -- those kinds of transactions play sort of perfectly to our strength because those are these large complex transactions that banks shy away from, from time to time. And if you look at all of our activity over the last 6 months, and Barry and Stew both talked about this, sort of one-stop shop for large deals. When they're transitional, that really takes a lot of players off of the playing field and allows us to make outsized returns on those kinds of transactions. But yes, there's more competition all the time.

And transitional might mean looking at deals and maybe 50% lease with a 6 cap -- 6 yield, that yield. We're having done that, but in a strong market, we stabilize at the 9 yield. And the building will trade at a fixed cap [indiscernible] the right pricing we would make. And I think you're seeing that there are holes for us that are big enough to -- we have a big pipeline. I mean, we've got a lot of deals in the pipeline. And it's pretty good stuff with good credit support and very good attachment points. And we look very carefully at what we're lending per foot, what we're lending per room, what we're lending per foot at a residential project or what we're lending per foot if it's a office project or a retail project [ph]. So we're doing -- I'm pretty pleased that we reviewed our portfolio, and we have almost no issues anywhere in the portfolio. And in fact, I'd say we have no issues in the portfolio at all. And in fact, things are -- as I've mentioned in my comments, things are, on the whole, much better than we underwrote across the board, which isn't surprising, really. I mean, the interest rate environment has continued to melt down. So it's good. We're pleased, and we're feeling good about things.

Josh, other than the election, we recently did a press release on the transaction just like that. Blackstone, the largest real big player in the world or in the United States acquired 100 Montgomery in San Francisco. We were able to make a 65 LTV loan.

And they accepted our pricing.

And it works for them because it was a speedy deal, and it works for us because we obviously like the sponsor and we understood the real estate. So I do want to say one thing. I forgot what it was, though. What was the other question, if there is one?

[Operator Instructions] And we'll take our final question from Jade Rahmani with KBW. Jade J. Rahmani - Keefe, Bruyette, & Woods, Inc., Research Division: I was wondering if you could share your thoughts on the quarterly dividend since the midpoint of your core EPS guidance is above the $0.42 dividend. Do you think the $0.42 dividend is including any of the extraordinary dividend you still expect to pay in the fourth quarter?

Jade, I'm not sure I understand your question. We're paying the $1.76, which is $0.44, and we said we're going to pay a onetime special to true-up the dividend. Essentially, we're going to pay something above $1.76 and probably below 100% of our earnings. There is -- we have a basically kind of an NOL or sort of we have -- we don't have to pay $1.00 on the dollar because we overpaid early in our life. But we will continue with earnings continuing at this pace next year or hopefully grow. Whatever happens, we're going to continue -- we're going to have a problem. We're going to have to increase the dividend. We told you we're going to increase the dividend with that true-up right now in the fourth quarter annually. And so we haven't determined the exact number. When we do, we'll announce it to you and the rest of our shareholder base at the same time. Jade J. Rahmani - Keefe, Bruyette, & Woods, Inc., Research Division: I guess the core question is typically with the other mortgage REIT dividends do reprice when asset yield and investment spreads decline, as they have recently. So my core question is whether you view the dividend in that way as likely to fluctuate based on raise or if you look at it as more of a promise and signaling tool to investors, which would be more similar to equity REIT or non-REIT.

I'm not sure I totally get the question. I think we feel like our dividend is solid. I'm aware of the challenges that the residential mortgage REITs are facing as the yield curves flatten and their cost of funds may not be falling as fast as the coupons their reinvesting at. I think we're a different piece. We obviously don't have the leverage on our books that they do. I think in some cases 6, 7 to 1. And so we have pretty good visibility, as I mentioned. What disrupts our dividend, ability to pay our dividend, are fast repayments, large repayments. So I made a comment about our rollover schedule, stated rollover schedule. It would be difficult if one credit with $300 million of equities, which I don't think we have, but if we had one, refinanced unexpectedly in a quarter and we were repaid. But I don't think it's going to kill us. We just have to reinvest the capital and go through that. And it might -- we're feeling comfortable with our dividend at the moment. If we actually feel like we cannot hit the kinds of spreads overall that we have earned in the past, you'll hear us comment on it on the future earnings call. I think we are -- as I mentioned, we've been through this cycle already, I think, 3 times as the credit markets went in and out, and we got nervous. And then they loosened up. And then there was a crisis. You have a little fiscal cliff crisis, we'll put out $1 billion in a week. I mean, if there's a fiscal crisis and the bank's stack up and everyone gets nervous and spreads back up, we'll be back in business, lending a lot of money quickly to guys who…

You can. Jade J. Rahmani - Keefe, Bruyette, & Woods, Inc., Research Division: I just wanted to ask, the Starwood Capital acquisition of Eleanor property, does this present any potential sourcing or other financing opportunities for Starwood Property Trust?

With respect to the [indiscernible] right now, I mean, I think you can assume that if the transaction goes forward, the REIT would benefit in some material manner. But let's leave it at that because we'll talk about it when we can talk about it. Thank you all. Thanks, everyone. Have a great day, and good luck. Bye.

And that concludes today's teleconference. Thank you for your participation.