A P O L L O C O M M E R C I A L R E A L E S T A T E F I N A N C E, I N C. Supplemental Financial Information Q2 2018 July 25, 2018 Information is as of June 30, 2018, except as otherwise noted. It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments in this document.
Forward Looking Statements and Other Disclosures This presentation may contain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond management s control. These forward-looking statements may include information about possible or assumed future results of Apollo Commercial Real Estate Finance, Inc. s ( ARI or the Company ) business, financial condition, liquidity, results of operations, plans and objectives. When used in this presentation, the words believe, expect, anticipate, estimate, plan, continue, intend, should, may or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: ARI s business and investment strategy; ARI s operating results; ARI s ability to obtain and maintain financing arrangements; and the return on equity, the yield on investments and risks associated with investing in real estate assets including changes in business conditions and the general economy. The forward-looking statements are based on management s beliefs, assumptions and expectations of future performance, taking into account all information currently available to ARI. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to ARI. Some of these factors are described under Risk Factors, and Management s Discussion and Analysis of Financial Condition and Results of Operations included in ARI s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and other filings with the Securities and Exchange Commission ( SEC ), which are accessible on the SEC s website at www.sec.gov. If a change occurs, ARI s business, financial condition, liquidity and results of operations may vary materially from those expressed in ARI s forwardlooking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for management to predict those events or how they may affect ARI. Except as required by law, ARI is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation contains information regarding ARI s financial results that is calculated and presented on the basis of methodologies other than in accordance with accounting principles generally accepted in the United States ( GAAP ), including Operating Earnings and Operating Earnings per share. Please refer to slide 20 for a definition of Operating Earnings and the reconciliation of the applicable GAAP financial measures to non-gaap financial measures set forth on slides 18 and 19. This presentation may contain statistics and other data that in some cases has been obtained from or compiled from information made available by third-party service providers. ARI makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness or completeness of such information. Past performance is not indicative nor a guarantee of future returns. Index performance and yield data are shown for illustrative purposes only and have limitations when used for comparison or for other purposes due to, among other matters, volatility, credit or other factors (such as number and types of securities). Indices are unmanaged, do not charge any fees or expenses, assume reinvestment of income and do not employ special investment techniques such as leveraging or short selling. No such index is indicative of the future results of any investment by ARI. 1
Q2 Highlights Earnings Net income available to common stockholders of $48.5 million, or $0.39 per diluted share of common stock Operating Earnings 1 of $54.9 million, or $0.44 per diluted share of common stock Net interest income of $70.8 million Dividend Common stock dividend of $0.46 per share 9.8% annualized dividend yield based upon closing stock price on July 24, 2018 Loan Originations Committed capital to $968.0 million of commercial real estate loans, $961.7 million of which was funded during the quarter Total committed capital for six months ended June 30, 2018 - $1.9 billion Funded $112.5 million for loans closed prior to the quarter Loan Portfolio Capitalization Total loan portfolio of $4.9 billion Weighted average remaining term 2 of 2.8 years Weighted average unlevered all-in-yield 3 of 9.1% 91% of loans have floating interest rates Amended the Company s master repurchase agreement with JPMorgan Chase Bank to extend the term through June 2021 Amended and restated the Company s master repurchase agreement with Deutsche Bank to increase the borrowing capacity to $855 million and extend the term through March 2021 Entered into a master repurchase agreement with Credit Suisse to finance a first mortgage loan Total common equity market capitalization 4 of $2.2 billion at June 30, 2018 2
Financial Summary Income Statement ($ mm, except per share data) 2Q18 2Q17 % Change Net Interest Income $70.8 $62.2 13.8% Net Income Available to Common Stockholders 48.5 26.9 80.3% Weighted Average Common Shares Outstanding 124.6 96.8 28.7% Net Income Available to Common Stockholders per Share $0.39 $0.28 39.3% 1 Operating Earnings 54.9 44.6 23.1% 1 Operating Earnings per Common Share $0.44 $0.46 (4.5%) Balance Sheet Balance Sheet ($ mm) 6/30/2018 12/31/2017 % Change Investments at Amortized Cost, net $4,867 $3,680 32.3% 5 Invested Net Equity at Cost 2,886 2,335 23.6% Common Stockholders' Equity 2,001 1,746 14.6% Preferred Stockholders' Equity (liquidation preference) 342 342 - Convertible Senior Notes, net 587 585 0.3% Secured Debt Arrangements, net 6 1,961 1,331 47.3% 7 Debt to Common Equity 1.2x 0.9x 33.3% Fixed Charge Coverage 8 2.7x 2.8x (10.0%) 3
Q2 Investment Activity 2Q18 Investment Summary Outstanding Portfolio Unfunded Commitment 11 19% 2% Unfunded Commitment 11 Add-on Funding $113 9 ($238) ($37) $818 81% 98% $853 $962 First Mortgage Subordinate Floating Rate Fixed Rate ($ mm) $4,867 Loans Closed 12 $4,067 Commitments to New Loans $968 Add-on Fundings 9 $113 Weighted Average LTV 10 64% Weighted Average Unlevered All-in-Yield 3 8.2% 1Q18 Fundings Repayments Other 2Q18 12 4
YTD Investment Activity YTD Investment Summary Outstanding Portfolio Add-on Funding 13 Unfunded Commitment 11 14% 1% $104 ($376) ($18) $818 86% 99% Unfunded Commitment 11 $1,477 $436 First Mortgage Subordinate Floating Rate Fixed Rate ($ mm) $4,867 Loans Closed 19 $3,680 Commitments to New Loans $1,890 Add-on Fundings 13 $104 Weighted Average LTV 10 59% Weighted Average Unlevered All-in-Yield 3 8.3% 4Q17 Fundings Repayments Other 2Q18 12 5
Q2 Investment Activity Summary of New Investments $154.0 million floating-rate senior mortgage loan ($151.5 million of which was funded at closing) secured by a 623-key resort hotel in Honolulu, Hawaii $140.0 million floating-rate senior mortgage loan (all of which was funded at closing) secured by a 218-key hotel in Miami Beach, Florida $114.5 million floating-rate senior mortgage condominium inventory loan (all of which was funded at closing) secured by 22 luxury units in the Flatiron submarket of New York City $110.0 million floating-rate senior mortgage loan (all of which was funded at closing) secured by a recently constructed 612-key hotel in the Times Square submarket of New York City. ARI previously held a $105.0 million investment in the property and the upsize brings ARI s total investment to $215 million $95.0 million floating-rate mezzanine loan (all of which was funded at closing) secured by a portfolio of 51 independent living properties comprising 5,486 units located throughout the United States $79.4 million floating-rate senior mortgage condominium inventory loan ($75.5 million of which was funded at closing) secured by 70 units in the Red Hook submarket of Brooklyn, New York 54.7 million ($72.5 million) 14 floating-rate senior mortgage condominium inventory loan (all of which was funded at closing) secured by 22 units and retail space in the Soho section of London, U.K. $63.5 million floating-rate senior mortgage hotel loan (all of which was funded at closing) secured by a 404-key resort hotel located in Scottsdale, Arizona $50.0 million floating-rate senior mortgage condominium inventory loan (all of which was funded at closing) secured by 19 units and retail space in the Chelsea submarket of New York City Other investments include two floating-rate hotel loans and one multifamily loan totaling $89.1 million 6
Commercial Real Estate Loan Portfolio Overview Loan Position at Amortized Cost Loan Position by Invested Net Equity at Amortized Cost 23% 40% 60% 77% First Mortgage Subordinate First Mortgage Subordinate ($ mm) 6/30/2018 3/31/2018 Number of Loans 70 Loans 63 Loans Amortized Cost $4,867 $4,067 Invested Net Equity at Cost 5 $2,886 $2,885 Unfunded Loan Commitments 11 $818 $853 Weighted Average Unlevered Yield on Floating-Rate Loans L+ 6.9% L+7.3% Weighted Average Unlevered All-in-Yield on Loan Portfolio 3 9.1% 9.2% Weighted Average Remaining Term 2 2.8 Years 2.7 Years 7
Commercial Real Estate Loan Portfolio Overview Geographic Diversification by Amortized Cost Property Type by Amortized Cost 1% 1% 8% 4% 3%2% 30% 7% 5% 4%3% 23% 10% 9% 13% 12% 15% 15% 13% 15% 7% Condominium Manhattan, NY Midwest United Kingdom Southeast West Brooklyn, NY Mid Atlantic Other International Southwest Northeast Hotel Residential-for-sale: construction Office Mixed Use Retail Center Industrial Residential-for-sale: inventory Urban Predevelopment Multifamily Healthcare 15 Other ($ mm) Property Type Manhattan, NY Brooklyn, NY Northeast Midwest Southeast West Mid Atlantic Southwest United Kingdom Other International Total Hotel $427 / 9% - - - $275 / 6% $198 / 4% $58 / 1% $88 / 2% - $90 / 2% $1,138 / 23% Residential-for-sale: inventory 219 / 5% 75 / 2% - - - - 28 / 1% - 294 / 6% - 617 / 13% Residential-for-sale: construction 304 / 6% - - - - 30 / 1% - - - - 334 / 7% Urban Predevelopment 65 / 1% 128 / 3% - - 221 / 5% 62 / 1% - - 247 / 5% - 724 / 15% Office 134 / 3% 75 / 2% - 251 / 5% - 68 / 1% - - 76 / 2% - 604 / 13% Multifamily 120 / 2% 111 / 2% 1 / 0% 59 / 1% 10 / 0% 64 / 1% - 6 / 0% 43 / 1% 35 / 1% 449 / 9% Mixed Use 175 / 4% - - 175 / 4% 7 / 0% - - - - - 357 / 7% Healthcare - - 22 / 0% 30 / 1% 47 / 1% 58 / 1% 30 / 1% 19 / 0% 50 / 1% - 256 / 5% Retail Center - - - 171 / 4% 31 / 1% - - - - - 202 / 4% 15 Other - - 16 / 0% 22 / 0% 13 / 0% 7 / 0% 96 / 2% - - - 154 / 3% Industrial - - - 10 / 0% 4 / 0% 13 / 0% 2 / 0% 3 / 0% - - 32 / 1% Total 16 $1,445 / 30% $389 / 8% $38 / 1% $719 / 15% $609 / 12% $500 / 10% $215 / 4% $116 / 2% $711 / 15% $126 / 3% $4,867 / 100% 8
Senior Loan Portfolio Overview Amortized Unfunded Fully-extended Property Type Risk Rating Origination Date Cost ($mm) Commitment ($mm) Construction Loan Maturity Location Residential-for-sale: inventory 3 3/2018 $223-3/2021 London, UK Urban Predevelopment 3 1/2016 221-7/2019 Miami, FL Hotel 3 9/2016 215-8/2021 Manhattan, NY Urban Predevelopment 3 4/2017 183-3/2019 London, UK Office 3 11/2017 176-1/2023 Chicago, IL Retail Center 4 11/2014 171-9/2018 Cincinnati, OH Hotel 3 4/2018 151 2 4/2023 Honolulu, HI Hotel 17 3 9/2015 140-6/2023 Manhattan, NY Hotel 3 5/2018 139-6/2023 Miami, FL Mixed Use 3 9/2016 133-10/2020 Chicago, IL Urban Predevelopment 3 3/2017 128-9/2018 Brooklyn, NY Mixed Use 2 7/2017 125-6/2019 Manhattan, NY Office 3 11/2017 120 127 Y 12/2022 Manhattan, NY Residential-for-sale: inventory 3 6/2018 113-6/2020 Manhattan, NY Multifamily 3 4/2014 80-7/2023 Various Other 2 10/2016 80-8/2019 Manassas, VA Hotel 3 3/2017 77-3/2022 Atlanta, GA Office 3 12/2017 76 59 3/2022 London, UK Residential-for-sale: inventory 3 5/2018 75 4 6/2020 Brooklyn, NY Residential-for-sale: inventory 3 6/2018 71-6/2020 London, UK Multifamily 3 10/2017 67-11/2021 Brooklyn, NY Urban Predevelopment 3 11/2016 65-12/2018 Manhattan, NY Urban Predevelopment 3 7/2017 64 16 4/2019 London, UK Hotel 3 4/2018 63-5/2023 Scottsdale, AZ Urban Predevelopment 3 12/2016 62 19 12/2020 Los Angeles, CA Hotel 2 1/2017 60-1/2022 Miami, FL Multifamily 3 11/2014 59-11/2021 Various Office 3 3/2018 58 29 4/2023 Chicago, IL Hotel 3 12/2017 57 32 Y 12/2022 Manhattan, NY 18 Office 3 1/2018 55 158 Y 1/2022 Renton, WA Residential-for-sale: inventory 3 5/2018 50-4/2021 Manhattan, NY Multifamily 3 5/2016 44 8 6/2019 Brooklyn, NY Multifamily 3 10/2017 43-10/2022 London, UK Hotel 3 12/2015 42 1 12/2020 St. Thomas, USVI Multifamily 3 12/2017 39 1 1/2020 Manhattan, NY Hotel 3 2/2018 38-3/2023 Pittsburgh, PA Multifamily 19 5 11/2014 37-11/2019 Williston, ND Mixed Use 3 7/2017 36-2/2019 Manhattan, NY Retail Center 3 2/2017 31 3 9/2020 Miami, FL 19 Residential-for-sale: inventory 5 2/2014 28-4/2019 Bethesda, MD Residential-for-sale: construction 3 1/2018 16 64 Y 1/2023 Manhattan, NY Mixed Use 3 7/2017 14-2/2019 Manhattan, NY Residential-for-sale: construction 2 3/2018 (1) 115 Y 3/2023 San Francisco, CA Sub Total/W.A. - Senior Loans $3,724 $638 7% 2.7 Years Weighted Average Yield on Loans with Floating Rate L+5.7% - Weighted Average All-in Yield 3 on All Senior Loans 7.8% 9
Subordinate Loan Portfolio Overview Amortized Unfunded Fully-extended Property Type Risk Rating Origination Date Cost ($mm) Commitment ($mm) Construction Loan Maturity Location 20 Residential-for-sale: construction 3 6/2015 $171 - Y 7/2020 Manhattan, NY Healthcare 3 10/2016 112-10/2021 Various Healthcare 3 6/2018 94-5/2019 Various Residential-for-sale: construction 3 2/2016 77 - Y 2/2021 Manhattan, NY Office 3 3/2017 75-10/2018 Brooklyn, NY Other 3 9/2017 74-9/2022 Various Multifamily 3 10/2015 60 4 7/2019 Manhattan, NY Healthcare 3 1/2015 50-12/2019 Various Hotel 3 6/2018 48-2/2023 Various Mixed Use 3 1/2017 42-2/2027 Cleveland, OH 20 Residential-for-sale: construction 3 11/2017 37 - Y 7/2020 Manhattan, NY Residential-for-sale: inventory 3 10/2016 34-11/2020 Manhattan, NY Industrial 3 5/2013 32-5/2023 Various Residential-for-sale: construction 3 12/2017 31 25 Y 4/2023 Los Angeles, CA Hotel 3 6/2015 25-7/2025 Phoenix, AZ Residential-for-sale: inventory 3 6/2017 23-12/2020 Manhattan, NY Multifamily 3 5/2018 21-5/2028 Cleveland, OH Hotel 3 6/2015 20-7/2019 Washington, DC Hotel 3 2/2015 20-1/2020 Burbank, CA Hotel 3 6/2018 20-6/2023 Las Vegas, NV 17 Hotel 3 9/2015 15 9 6/2023 Manhattan, NY Office 3 7/2013 14-7/2022 Manhattan, NY Office18 3 1/2018 13 36 Y 1/2022 Renton, WA Office 3 9/2012 9-10/2022 Kansas City, MO Hotel 3 5/2017 8-6/2027 Anaheim, CA Office 3 8/2017 8-9/2024 Troy, MI Mixed Use 3 7/2012 7-8/2022 Chapel Hill, NC Residential-for-sale: construction 3 12/2017 3 106 Y 6/2022 Manhattan, NY Sub Total/W.A. - Subordinate Loans $1,143 $180 29% 3.0 Years Total/W.A. Loans $4,867 $818 12% 2.8 Years Weighted Average Yield on Loans with Floating Rate L+11.6% - Weighted Average All-in Yield 3 on All Subordinate Loans 13.4% TOTAL PORTFOLIO WEIGHTED AVERAGE: Yield on Loans with Floating Rate L+6.9% - All-in-Yield 3 9.1% 10
Loan Portfolio Maturity Profile ($ mm) Fully Extended Loan Maturities and Estimated Future Fundings 21,22,23 $1,256.7 $1,105.2 $1,136.4 $880.5 $805.0 $436.2 $268.2 $321.2 $216.4 $12.3 $7.5 $25.0 $- $50.5 $20.9 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Fully Extended Maturity Estimated Future Funding 11
Capital Structure Overview ~$5.2 Billion Total Market Capitalization Capital Structure Composition Capital Structure Detail ($mm, except per share data) Amount ($) Cash and cash equivalents $76 Credit Facilities Capacity Maturity Outstanding 2 12% 7% 43% 24 J.P. Morgan (USD) $1,332 Jun-21 $951 25 J.P. Morgan (GBP) 50 Jun-21 50 Deutsche Bank (USD) 699 Mar-21 469 Deutsche Bank (GBP) 25 156 Mar-21 156 Goldman Sachs (USD) 300 Nov-20 209 Credit Suisse (GBP) 25 146 Dec-18 146 Total Credit Facilities $2,683 Feb-21 $1,981 Weighted Average Rate USD L+2.27% / GBP L+2.30% Convertible Notes 38% 5.50% Notes Mar-19 $255 4.75% Notes Aug-22 345 Total Convertible Debt Mar-21 $600 Total Debt Feb-21 $2,581 Preferred Stock Equity Market Cap Repo Facilities Convertible Notes Preferred Stock 8.0% Series B Preferred $169 8.0% Series C Preferred (currently callable) 173 Total Preferred Stock $342 Common Equity Market Capitalization Stock price as of 6/30/18 $18.28 Shares outstanding (mm) 123 4 Common Equity Market Capitalization $2,249 Total Market Capitalization $5,248 Debt to Common Equity Ratio 7 : 1.2x Fixed Charge Coverage 8 : 2.7x 12
Liquidity ~ ~ ~ ~ 26 13
Net Interest Income Per Share Interest Rate Sensitivity Rate Profile of Loan Portfolio 21 Net Interest Income Sensitivity to LIBOR 27 $0.25 $0.20 $0.20 9% $0.15 $0.15 91% $0.10 $0.10 $0.05 $0.05 Floating Rate Fixed Rate $0.00 0.25% 0.50% 0.75% 1.00% Increase in LIBOR 14
Financials
Consolidated Balance Sheets (in thousands - except share data) June 30, 2018 December 31, 2017 Assets: Cash $76,384 $77,671 Commercial mortgage loans, net (includes $3,115,916 and $2,148,368 pledged as collateral under secured debt arrangements in 2018 and 2017, respectively) 3,724,221 2,653,826 Subordinate loans, net 1,142,514 1,025,932 Loan proceeds held by servicer - 302,756 Other assets 27,584 28,420 Derivative assets, net 10,297 - Total Assets $4,981,000 $4,088,605 Liabilities and Stockholders Equity Liabilities: Secured debt arrangements, net (net of deferred financing costs of $20,307 and $14,348 in 2018 and 2017, respectively) $1,960,874 $1,330,847 Convertible senior notes, net 587,063 584,897 Derivative liabilities, net - 5,644 Accounts payable, accrued expenses and other liabilities 81,397 70,906 Payable to related party 9,013 8,168 Total Liabilities 2,638,347 2,000,462 Stockholders Equity: Preferred stock, $0.01 par value, 50,000,000 shares authorized: Series B preferred stock, 6,770,393 shares issued and outstanding ($169,260 aggregate liquidation preference) in 2018 and 2017 68 68 Series C preferred stock, 6,900,000 shares issued and outstanding ($172,500 aggregate liquidation preference) in 2018 and 2017 69 69 Common stock, $0.01 par value, 450,000,000 shares authorized, 123,020,301 and 107,121,235 shares issued and outstanding in 2018 and 2017, respectively 1,230 1,071 Additional paid-in-capital 2,447,973 2,170,078 Accumulated deficit (106,687) (83,143) Total Stockholders Equity 2,342,653 2,088,143 Total Liabilities and Stockholders Equity $4,981,000 $4,088,605 16
Consolidated Statements of Operations (in thousands - except share data and per share data) Net interest income: June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Interest income from commercial mortgage loans $65,141 $37,089 $117,255 $71,487 Interest income from subordinate loans 34,075 39,640 67,928 74,030 Interest income from securities - 4,700-10,754 Interest expense (28,437) (19,205) (51,177) (36,235) Net interest income 70,779 62,224 134,006 120,036 Operating expenses: General and administrative expenses (includes equity-based compensation of $4,014 and $7,356 in 2018 and $3,461 and $7,252 in 2017, respectively) (5,652) (5,200) (10,650) (10,958) Management fees to related party (9,013) (7,742) (17,105) (15,175) Total operating expenses (14,665) (12,942) (27,755) (26,133) Loss from unconsolidated joint venture - (3,305) - (2,847) Other income 343 244 546 352 Provision for loan losses and impairments (5,000) (5,000) (5,000) (5,000) Realized loss on sale of assets - - - (1,042) Unrealized loss on securities - (4,510) - (1,658) Foreign currency gain (loss) (29,649) 6,913 (19,524) 10,085 Gain (loss) on derivative instruments (includes unrealized gains (losses) of $24,796 and $15,941 in 2018 and $(7,435) and $(10,324) in 2017, respectively) Three months ended Six months ended 33,538 (7,389) 22,506 (10,434) Net income $55,346 $36,235 104,779 $83,359 Preferred dividends (6,834) (9,310) (13,669) (18,620) Net income available to common stockholders $48,512 $26,925 $91,110 $64,739 Net income per share of common stock $0.39 $0.28 $0.78 $0.68 Basic weighted average shares of common stock outstanding 123,019,993 95,428,134 116,651,305 93,530,831 Diluted weighted average shares of common stock outstanding 124,629,317 96,796,289 118,281,153 94,907,762 Dividend declared per share of common stock $0.46 $0.46 $0.92 $0.92 17
Reconciliation of GAAP Net Income to Operating Earnings 1 (in thousands - except share and per share data) Operating Earnings 1 : June 30, 2018 Three months ended Earnings Per Share June 30, 2017 Earnings Per Share Net income available to common stockholders $48,512 $0.39 $26,925 $0.28 Adjustments: Equity-based compensation expense 4,014 0.03 3,461 0.04 Unrealized loss on securities - - 4,510 0.05 (Gain) loss on derivative instruments (33,538) (0.27) 7,389 0.08 Foreign currency (gain) loss, net 29,797 0.24 (6,958) (0.08) Amortization of the convertible senior notes related to equity reclassification 1,156 0.01 618 0.01 Loss from unconsolidated joint venture - - 3,305 0.03 Provision for loan losses and impairments 5,000 0.04 5,000 0.05 Realized gain from unconsolidated joint venture - - 346 - Total Adjustments 6,429 0.05 17,671 0.18 Operating Earnings 1 $54,941 $0.44 $44,596 $0.46 Realized loss and cost from sale of CMBS - - - - Operating Earnings 1 excluding realized loss and costs from sale of CMBS $54,941 $0.44 $44,596 $0.46 Basic weighted average shares of common stock outstanding 123,019,993 95,428,134 Diluted weighted average shares of common stock outstanding 124,629,317 96,796,289 18
Reconciliation of GAAP Net Income to Operating Earnings 1 (in thousands - except share and per share data) Operating Earnings 1 : June 30, 2018 Six months ended Earnings Per Share June 30, 2017 Earnings Per Share Net income available to common stockholders $91,110 $ 0.78 $64,739 $0.68 Adjustments: Equity-based compensation expense 7,356 0.06 7,252 0.08 Unrealized loss on securities - - 1,658 0.02 (Gain) loss on derivative instruments (22,506) (0.19) 10,434 0.12 Foreign currency (gain) loss, net 19,435 0.16 (10,284) (0.11) Amortization of the convertible senior notes related to equity reclassification 2,296 0.02 1,226 0.01 Loss from unconsolidated joint venture - - 2,847 0.03 Provision for loan losses and impairments 5,000 0.04 5,000 0.05 Realized gain from unconsolidated joint venture - - 346 - Total Adjustments 11,581 0.09 18,479 0.20 Operating Earnings 1 $102,691 $0.87 $83,218 $0.88 Realized loss and costs from sale of CMBS - - 1,042 0.01 Operating Earnings 1 excluding realized loss and costs from sale of CMBS $102,691 $0.87 $84,260 $0.89 Basic weighted average shares of common stock outstanding 116,651,305 93,530,831 Diluted weighted average shares of common stock outstanding 118,281,153 94,907,762 19
Footnotes 1. Operating Earnings is a non-gaap financial measure that is used by the Company to approximate cash available for distribution and is defined by the Company as net income available to common stockholders, computed in accordance with GAAP, adjusted for (i) equity-based compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding); (ii) any unrealized gains or losses or other non-cash items included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains/losses, other than realized gains/(losses) related to interest income; (v) the non-cash amortization expense related to the reclassification of a portion of the convertible senior notes to stockholders equity in accordance with GAAP; and (vi) provision for loan losses and impairments. Please see slide 18 and 19 for a reconciliation of GAAP net income and GAAP net income per share to Operating Earnings and Operating Earnings per Share. Operating Earnings may also be adjusted to exclude certain other non-cash items, as determined by ACREFI Management, LLC, the Company s external manager (the Manager ) and approved by a majority of the Company's independent directors. 2. Assumes exercise of all extension options. 3. Weighted Average Unlevered All-in-Yield on the loan portfolio is based on the applicable benchmark rates as of June 30, 2018 on the floating rate loans and includes accrual of origination, extension, and exit fees. 4. Common equity market capitalization represents shares of common stock outstanding times the closing stock price on June 30, 2018. 5. Invested Net Equity at Cost is the amortized cost of loans less principal balance of secured debt arrangements; does not include debt secured by proceeds held by servicer. 6. Total debt balance less $20,307 and $14,348 at June 30, 2018 and December 31, 2017, respectively, in deferred financing costs. 7. Represents total secured debt arrangements and convertible senior notes, less cash and loan proceeds held by servicer to common equity. 8. Fixed charge coverage is EBITDA divided by interest expense and preferred stock dividends. 9. For loans closed prior to Q2 2018. 10. Reflects LTV as of date loans were originated or acquired. 11. Unfunded loan commitments are for loans that have yet to be funded. 12. Includes foreign currency appreciation/depreciation, PIK interest, loan loss reserves, and the accretion of loan costs and fees. 13. For loans closed prior to 2018. 14. Conversion to USD on the date of investment. 15. Other includes a data center and water park resorts. 16. Amounts and percentages may not foot due to rounding. 17. Both loans are secured by the same property. 18. Both loans are secured by the same property. 19. Amortized cost for these loans is net of the recorded provisions for loan losses and impairments. 20. Both loans are secured by the same property. 21. Based upon face amount of loans. 22. Maturities reflect the fully funded amounts of the loans. 23. Future funding dates are based upon the Manager s estimates based upon the best information available to the Manager at the time. There is no assurance that the payments will occur in accordance with these estimates or at all, which could affect the Company s operating results. 24. The debt balance as of June 30, 2018, includes asset specific borrowing: currently $132 million max capacity, all of which is drawn. 25. Conversion to USD using applicable June 30, 2018 spot rate. 26. Subject to availability of qualifying collateral assets, and approval of lenders. 27. Any such hypothetical impact on interest rates on the Company s variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment. Further, in the event of a change in interest rates of that magnitude, the Company may take actions to further mitigate the Company s exposure to such a change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company s financial structure. The analysis incorporates movements in both USD LIBOR and GBP LIBOR. 20