|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
27-0467113
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
c/o Apollo Global Management, LLC
9 West 57th Street, 43rd Floor, New York, New York
(Address of principal executive offices)
|
10019
(Zip Code)
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Title of Each Class
|
Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
|
New York Stock Exchange
|
8.00% Series B Cumulative Redeemable Perpetual Preferred
Stock, $0.01 par value, $25.00 mandatory liquidation preference
|
New York Stock Exchange
|
8.00% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, $25.00 mandatory liquidation preference
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New York Stock Exchange
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Large accelerated filer
|
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x
|
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Accelerated filer
|
|
o
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Non-accelerated filer
|
|
o
(Do not check if a smaller reporting company)
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|
Smaller reporting company
|
|
o
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Emerging growth company
|
|
o
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|
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Item 1.
|
||
Item 1A.
|
||
Item 1B.
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||
Item 2.
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||
Item 3.
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||
Item 4.
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||
|
||
Item 5.
|
||
Item 6.
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||
Item 7.
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||
Item 7A.
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Item 8.
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Item 9.
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||
Item 9A.
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||
Item 9B.
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||
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Item 10.
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Item 11.
|
||
Item 12.
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Item 13.
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Item 14.
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||
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Item 15.
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||
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Item 1.
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Business.
|
•
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The Company’s board of directors is composed of a majority of independent directors. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Company's board of directors are composed exclusively of independent directors.
|
•
|
In order to foster the highest standards of ethics and conduct in all business relationships, the Company has adopted a Code of Business Conduct and Ethics and Corporate Governance Guidelines, which cover a wide range of business practices and procedures that apply to all of its directors and officers. In addition, the Company has implemented Whistle Blowing Procedures for Accounting and Auditing Matters (the “Whistleblower Policy”) that set forth
|
•
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The Company has an insider trading policy that prohibits any of its directors or employees, partners, directors and officers of Apollo, as well as others, from buying or selling the Company’s securities on the basis of material nonpublic information.
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Item 1A.
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Risk Factors
|
•
|
the issuer issues securities the payment of which depends primarily on the cash flow from “eligible assets,” which are assets that by their terms convert into cash within a finite time period;
|
•
|
the securities sold are fixed-income securities rated investment grade by at least one rating agency except that fixed- income securities which are unrated or rated below investment grade may be sold to institutional accredited investors and any securities may be sold to “qualified institutional buyers” and to persons involved in the organization or operation of the issuer;
|
•
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the issuer acquires and disposes of eligible assets (1) only in accordance with the agreements pursuant to which the securities are issued and (2) so that the acquisition or disposition does not result in a downgrading of the issuer’s fixed-income securities and (3) the primary purpose of which is not recognizing gains or decreasing losses resulting from market value changes; and
|
•
|
unless the issuer is issuing only commercial paper, the issuer appoints an independent trustee, takes reasonable steps to transfer to the trustee an ownership or perfected security interest in the eligible assets, and meets rating agency requirements for commingling of cash flows.
|
•
|
actual receipt of an improper benefit or profit in money, property or services; or
|
•
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active and deliberate dishonesty by the director or officer that was established by a final judgment and was material to the cause of action adjudicated.
|
•
|
general market conditions;
|
•
|
the market’s view of the quality of the Company’s assets;
|
•
|
the market’s perception of the Company’s growth potential;
|
•
|
the Company’s eligibility to participate in and access capital from programs established by the U.S. government;
|
•
|
the Company’s current and potential future earnings and cash distributions; and
|
•
|
the market price of the shares of the Company’s common stock.
|
•
|
the Company’s cash flow from operations may be insufficient to make required payments of principal of and interest on the debt or the Company may fail to comply with all of the other covenants contained in the debt documents, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration
|
•
|
the Company’s debt may increase its vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs;
|
•
|
the Company may be required to dedicate a substantial portion of its cash flow from operations to payments on its debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and
|
•
|
the Company may not be able to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.
|
•
|
risks of delinquency and foreclosure, and risks of loss in the event thereof;
|
•
|
the dependence upon the successful operation of, and net income from, real property;
|
•
|
risks generally incident to interests in real property; and
|
•
|
risks specific to the type and use of a particular property.
|
•
|
acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses;
|
•
|
acts of war or terrorism, including the consequences of terrorist attacks;
|
•
|
adverse changes in national and local economic and market conditions;
|
•
|
changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;
|
•
|
costs of remediation and liabilities associated with environmental conditions such as indoor mold; and
|
•
|
the potential for uninsured or under-insured property losses.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
High
|
|
Low
|
|
Dividend
|
|
High
|
|
Low
|
|
Dividend
|
||||||||||||
First quarter
|
$
|
18.93
|
|
|
$
|
16.84
|
|
|
$
|
0.46
|
|
|
$
|
17.35
|
|
|
$
|
15.13
|
|
|
$
|
0.46
|
|
Second quarter
|
$
|
19.58
|
|
|
$
|
18.16
|
|
|
$
|
0.46
|
|
|
$
|
16.57
|
|
|
$
|
15.56
|
|
|
$
|
0.46
|
|
Third quarter
|
$
|
18.74
|
|
|
$
|
17.75
|
|
|
$
|
0.46
|
|
|
$
|
17.24
|
|
|
$
|
15.84
|
|
|
$
|
0.46
|
|
Fourth quarter
|
$
|
19.00
|
|
|
$
|
18.07
|
|
|
$
|
0.46
|
|
|
$
|
18.05
|
|
|
$
|
15.58
|
|
|
$
|
0.46
|
|
Total
|
|
|
|
|
$
|
1.84
|
|
|
|
|
|
|
$
|
1.84
|
|
|
Period Ending
|
|||||
|
12/31/12
|
12/31/13
|
12/31/14
|
12/31/15
|
12/31/16
|
12/31/17
|
Apollo Commercial Real Estate Finance, Inc.
|
100.00
|
109.98
|
121.56
|
141.24
|
151.33
|
184.74
|
Russell 2000
|
100.00
|
138.58
|
145.28
|
138.96
|
168.17
|
192.58
|
BBREMTG Index
|
100.00
|
98.22
|
116.88
|
106.06
|
128.53
|
154.12
|
Plan Category
|
Number of
securities to
be issued upon
exercise of
outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in the first
column of this table)
|
||||
Equity compensation plans approved by stockholders
|
—
|
|
|
$
|
—
|
|
|
4,175,122
|
|
Equity compensation plans not approved by stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
—
|
|
|
$
|
—
|
|
|
4,175,122
|
|
Item 6.
|
Selected Financial Data
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Operating Data
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
$
|
338,521
|
|
|
$
|
264,376
|
|
|
$
|
192,164
|
|
|
$
|
123,347
|
|
|
$
|
77,463
|
|
Interest expense
|
(78,057
|
)
|
|
(63,759
|
)
|
|
(48,861
|
)
|
|
(26,541
|
)
|
|
(4,356
|
)
|
|||||
Net interest income
|
260,464
|
|
|
200,617
|
|
|
143,303
|
|
|
96,806
|
|
|
73,107
|
|
|||||
Operating expenses
|
(52,377
|
)
|
|
(48,371
|
)
|
|
(26,111
|
)
|
|
(18,111
|
)
|
|
(17,575
|
)
|
|||||
Income (loss) from unconsolidated joint venture
|
(2,847
|
)
|
|
(96
|
)
|
|
3,464
|
|
|
(157
|
)
|
|
—
|
|
|||||
Other Income
|
940
|
|
|
1,094
|
|
|
1,239
|
|
|
34
|
|
|
20
|
|
|||||
Provision for loan losses and impairments
|
(5,000
|
)
|
|
(15,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Realized gain (loss) on sale of assets
|
(42,693
|
)
|
|
3,834
|
|
|
(443
|
)
|
|
—
|
|
|
—
|
|
|||||
Unrealized gain (loss) on securities
|
37,165
|
|
|
(26,099
|
)
|
|
(17,408
|
)
|
|
4,147
|
|
|
(3,065
|
)
|
|||||
Foreign currency gain (loss)
|
18,506
|
|
|
(29,284
|
)
|
|
(4,894
|
)
|
|
(4,050
|
)
|
|
—
|
|
|||||
Bargain purchase gain
|
—
|
|
|
40,021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss on early extinguishment of debt
|
(1,947
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain (loss) on derivative instruments
|
(19,180
|
)
|
|
31,160
|
|
|
4,106
|
|
|
4,070
|
|
|
(2
|
)
|
|||||
Net income
|
193,031
|
|
|
157,876
|
|
|
103,256
|
|
|
82,739
|
|
|
52,485
|
|
|||||
Preferred dividends
|
(36,761
|
)
|
|
(30,295
|
)
|
|
(11,884
|
)
|
|
(7,440
|
)
|
|
(7,440
|
)
|
|||||
Net income available to common stockholders
|
156,270
|
|
|
127,581
|
|
|
91,372
|
|
|
75,299
|
|
|
45,045
|
|
|||||
Net income per share—basic and diluted
|
$
|
1.54
|
|
|
$
|
1.74
|
|
|
$
|
1.54
|
|
|
$
|
1.72
|
|
|
$
|
1.26
|
|
Dividends declared per share
|
$
|
1.84
|
|
|
$
|
1.84
|
|
|
$
|
1.78
|
|
|
$
|
1.60
|
|
|
$
|
1.60
|
|
Balance Sheet Data (at period end)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
4,088,605
|
|
|
$
|
3,482,977
|
|
|
$
|
2,712,590
|
|
|
$
|
1,837,703
|
|
|
$
|
906,876
|
|
Total liabilities
|
2,000,462
|
|
|
1,550,750
|
|
|
1,337,166
|
|
|
982,634
|
|
|
223,900
|
|
|||||
Total stockholders’ equity
|
2,088,143
|
|
|
1,932,227
|
|
|
1,375,424
|
|
|
855,069
|
|
|
682,956
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
Description
|
|
Amortized
Cost |
|
Weighted Average Coupon (1)
|
|
Weighted Average All-in Yield (1)
(2) |
|
Secured Debt
|
|
Cost of Funds
|
|
Equity at
cost |
|||||||||
First mortgages
|
|
$
|
2,653,826
|
|
|
6.9
|
%
|
|
7.4
|
%
|
|
$
|
1,345,195
|
|
|
3.9
|
%
|
|
$
|
1,308,631
|
|
Subordinate loans
|
|
1,025,932
|
|
|
12.4
|
%
|
|
13.5
|
%
|
|
—
|
|
|
—
|
|
|
1,025,932
|
|
|||
Total/Weighted Average
|
|
$
|
3,679,758
|
|
|
8.4
|
%
|
|
9.1
|
%
|
|
$
|
1,345,195
|
|
|
3.9
|
%
|
|
$
|
2,334,563
|
|
(1)
|
Weighted-Average Coupon and Weighted Average All-in-Yield reflects one-month LIBOR at
December 31, 2017
, which was
1.56%
.
|
(2)
|
Weighted-Average All-in-Yield includes the amortization of deferred origination fees, loan origination costs and accrual of both extension and exit fees.
|
|
|
Average month-end balances for the year ended December 31, 2017
|
||||
Description
|
|
Assets
|
|
Related debt
|
||
Commercial mortgage loans, net
|
|
2,148,219
|
|
|
1,193,197
|
|
Subordinate loans, net
|
|
1,201,258
|
|
|
—
|
|
CMBS
|
|
246,087
|
|
|
190,483
|
|
|
Year ended December 31,
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
$
|
||||||||||
Net interest income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income from securities
|
$
|
10,466
|
|
|
$
|
27,586
|
|
|
$
|
33,188
|
|
|
$
|
(17,120
|
)
|
|
$
|
(5,602
|
)
|
Interest income from securities, held to maturity
|
4,132
|
|
|
11,469
|
|
|
12,054
|
|
|
(7,337
|
)
|
|
(585
|
)
|
|||||
Interest income from commercial mortgage loans
|
158,632
|
|
|
102,927
|
|
|
56,092
|
|
|
55,705
|
|
|
46,835
|
|
|||||
Interest income from subordinate loans
|
165,291
|
|
|
122,394
|
|
|
90,830
|
|
|
42,897
|
|
|
31,564
|
|
|||||
Interest expense
|
(78,057
|
)
|
|
(63,759
|
)
|
|
(48,861
|
)
|
|
(14,298
|
)
|
|
(14,898
|
)
|
|||||
Net interest income
|
260,464
|
|
|
200,617
|
|
|
143,303
|
|
|
59,847
|
|
|
57,314
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
General and administrative expenses
|
(20,725
|
)
|
|
(24,983
|
)
|
|
(9,492
|
)
|
|
4,258
|
|
|
(15,491
|
)
|
|||||
Management fees to related party
|
(31,652
|
)
|
|
(23,388
|
)
|
|
(16,619
|
)
|
|
(8,264
|
)
|
|
(6,769
|
)
|
|||||
Total operating expenses
|
(52,377
|
)
|
|
(48,371
|
)
|
|
(26,111
|
)
|
|
(4,006
|
)
|
|
(22,260
|
)
|
|||||
Income (loss) from unconsolidated joint venture
|
(2,847
|
)
|
|
(96
|
)
|
|
3,464
|
|
|
(2,751
|
)
|
|
(3,560
|
)
|
|||||
Other income
|
940
|
|
|
1,094
|
|
|
1,239
|
|
|
(154
|
)
|
|
(145
|
)
|
|||||
Provision for loan losses and impairments
|
(5,000
|
)
|
|
(15,000
|
)
|
|
—
|
|
|
10,000
|
|
|
(15,000
|
)
|
|||||
Realized gain (loss) on sale of assets
|
(42,693
|
)
|
|
3,834
|
|
|
(443
|
)
|
|
(46,527
|
)
|
|
4,277
|
|
|||||
Unrealized gain (loss) on securities
|
37,165
|
|
|
(26,099
|
)
|
|
(17,408
|
)
|
|
63,264
|
|
|
(8,691
|
)
|
|||||
Foreign currency gain (loss)
|
18,506
|
|
|
(29,284
|
)
|
|
(4,894
|
)
|
|
47,790
|
|
|
(24,390
|
)
|
|||||
Bargain purchase gain
|
—
|
|
|
40,021
|
|
|
—
|
|
|
(40,021
|
)
|
|
40,021
|
|
|||||
Loss on early extinguishment of debt
|
(1,947
|
)
|
|
—
|
|
|
—
|
|
|
(1,947
|
)
|
|
—
|
|
|||||
Gain (loss) on derivative instruments
|
(19,180
|
)
|
|
31,160
|
|
|
4,106
|
|
|
(50,340
|
)
|
|
27,054
|
|
|||||
Net income
|
$
|
193,031
|
|
|
$
|
157,876
|
|
|
$
|
103,256
|
|
|
$
|
35,155
|
|
|
$
|
54,620
|
|
|
|
December 31, 2017
|
|||||||
Risk Rating
|
|
Number of Loans
|
|
Carrying Value
|
|
% of Loan Portfolio
|
|||
1
|
|
—
|
|
$
|
—
|
|
|
—
|
%
|
2
|
|
5
|
|
399,326
|
|
|
10
|
%
|
|
3
|
|
51
|
|
3,034,358
|
|
|
83
|
%
|
|
4
|
|
1
|
|
168,208
|
|
|
5
|
%
|
|
5
|
|
2
|
|
77,866
|
|
|
2
|
%
|
|
|
|
59
|
|
$
|
3,679,758
|
|
|
100
|
%
|
•
|
Reduced Tax Rates.
The highest individual U.S. federal income tax rate on ordinary income is reduced from 39.6% to 37% (through taxable years ending in 2025), and the maximum corporate income tax rate is reduced from 35% to 21%. In addition, individuals, trust, and estates that own the Company's stock are permitted to deduct up to 20% of dividends received from the Company (other than dividends that are designated as capital gain dividends or qualified dividend income), generally resulting in an effective maximum U.S. federal income tax rate of 29.6% on such dividends (through taxable years ending in 2025). Further, the amount that the Company is required to withhold on distributions to non-U.S. stockholders that are treated as attributable to gains from the Company's sale or exchange of U.S. real property interests is reduced from 35% to 21%.
|
•
|
Net Operating Losses.
The Company may not use net operating losses generated beginning in 2018 to offset more than 80% of the Company's taxable income (prior to the application of the dividends paid deduction). Net operating losses generated beginning in 2018 can be carried forward indefinitely but can no longer be carried back.
|
•
|
Limitation on Interest Deductions.
The amount of net interest expense that each of the Company and its TRSs may deduct for a taxable year is limited to the sum of (i) the taxpayer's business interest income for the taxable year, and (ii) 30% of the taxpayer's "adjusted taxable income" for the taxable year. For taxable years beginning before January 1, 2022, adjusted taxable income means earnings before interest, taxes, depreciation, and amortization ("EBITDA"); for taxable years beginning on or after January 1, 2022, adjusted taxable income is limited to earnings before interest and taxes ("EBIT"). The Company generally expects to have business interest
|
•
|
Alternative Minimum Tax
. The corporate alternative minimum tax is eliminated.
|
•
|
Income Accrual
. The Company is required to recognize certain items of income for U.S. federal income tax purposes no later than the Company would report such items on its financial statements. As discussed above, earlier recognition of income for U.S. federal income tax purposes could impact the Company's ability to satisfy the REIT distribution requirements. This provision generally applies to taxable years beginning after December 31, 2017, but will apply with respect to income from a debt instrument having "original issue discount" for U.S. federal income tax purposes only for taxable years beginning after December 31, 2018.
|
|
December 31, 2017
|
|
December 31, 2016
|
Debt-to-Equity Ratio
(1)(2)
|
0.9x
|
|
1.0x
|
•
|
no investment will be made that would cause the Company to fail to qualify as a REIT for U.S. federal income tax purposes;
|
•
|
no investment will be made that would cause the Company to register as an investment company under the 1940 Act;
|
•
|
investments will be predominantly in the Company’s target assets;
|
•
|
no more than 20% of the Company’s cash equity (on a consolidated basis) will be invested in any single investment at the time of the investment; and
|
•
|
until appropriate investments can be identified, the Manager may invest the proceeds of any offering in interest bearing, short-term investments, including money market accounts and/or funds, that are consistent with the Company’s intention to qualify as a REIT.
|
|
Less than 1
year (3) |
|
1 to 3
years (3) |
|
3 to 5
years (3) |
|
More
than 5 years |
|
Total
|
||||||||||
JPMorgan Facility
(1)
|
$
|
227,530
|
|
|
$
|
778,839
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,006,369
|
|
DB Repurchase Facility
(1)
|
73,465
|
|
|
6,891
|
|
|
—
|
|
|
—
|
|
|
80,356
|
|
|||||
Goldman Facility
(1)
|
7,891
|
|
|
27,116
|
|
|
—
|
|
|
—
|
|
|
35,007
|
|
|||||
Convertible Senior Notes
|
27,866
|
|
|
292,977
|
|
|
372,100
|
|
|
—
|
|
|
692,943
|
|
|||||
Unfunded loan commitments
(2)
|
264,001
|
|
|
162,579
|
|
|
9,047
|
|
|
—
|
|
|
435,627
|
|
|||||
Total
|
$
|
600,753
|
|
|
$
|
1,268,402
|
|
|
$
|
381,147
|
|
|
$
|
—
|
|
|
$
|
2,250,302
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income available to common stockholders
|
$
|
156,270
|
|
|
$
|
127,581
|
|
|
$
|
91,372
|
|
Adjustments:
|
|
|
|
|
|
||||||
Equity-based compensation expense
|
13,314
|
|
|
7,090
|
|
|
4,387
|
|
|||
Unrealized (gain) loss on securities
|
(37,165
|
)
|
|
26,099
|
|
|
17,408
|
|
|||
(Gain) loss on derivative instruments
|
19,180
|
|
|
(31,160
|
)
|
|
(4,106
|
)
|
|||
Foreign currency (gain) loss, net
|
(19,102
|
)
|
|
29,937
|
|
|
4,894
|
|
|||
Amortization of the Convertible Senior Notes related to equity reclassification
|
3,046
|
|
|
2,344
|
|
|
2,206
|
|
|||
(Income) loss from unconsolidated joint venture
|
2,847
|
|
|
96
|
|
|
(3,464
|
)
|
|||
Provision for loan losses and impairments
|
5,000
|
|
|
15,000
|
|
|
—
|
|
|||
Series A Preferred Stock redemption charge
|
3,016
|
|
|
—
|
|
|
—
|
|
|||
Bargain purchase gain
|
—
|
|
|
(40,021
|
)
|
|
—
|
|
|||
Realized gain from unconsolidated joint venture
|
346
|
|
|
—
|
|
|
—
|
|
|||
Total adjustments:
|
(9,518
|
)
|
|
9,385
|
|
|
21,325
|
|
|||
Operating Earnings
|
$
|
146,752
|
|
|
$
|
136,966
|
|
|
$
|
112,697
|
|
|
|
|
|
|
|
||||||
Realized loss and costs from sale of CMBS
(1)
|
44,640
|
|
|
1,470
|
|
|
443
|
|
|||
Operating earnings excluding realized loss and costs from sale of CMBS
|
$
|
191,392
|
|
|
$
|
138,436
|
|
|
$
|
113,140
|
|
Basic and diluted Operating Earnings per share of common stock
|
$
|
1.45
|
|
|
$
|
1.87
|
|
|
$
|
1.90
|
|
Basic and diluted Operating Earnings excluding realized loss and costs from sale of CMBS per share of common stock
|
$
|
1.89
|
|
|
$
|
1.89
|
|
|
$
|
1.91
|
|
Basic weighted average shares of common stock outstanding
|
99,859,153
|
|
|
72,371,374
|
|
|
58,674,046
|
|
|||
Diluted weighted average shares of common stock outstanding
|
101,232,610
|
|
|
73,305,101
|
|
|
59,273,280
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
•
|
attempting to structure its financing agreements to have a range of different maturities, terms, amortizations and interest rate adjustment periods;
|
•
|
using hedging instruments, interest rate swaps and interest rate caps; and
|
•
|
to the extent available, using securitization financing to better match the maturity of the Company’s financing with the duration of its assets.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
Schedule
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Assets:
|
|
|
|
||||
Cash
|
$
|
77,671
|
|
|
$
|
200,996
|
|
Restricted cash
|
—
|
|
|
62,457
|
|
||
Securities, at estimated fair value
|
—
|
|
|
331,076
|
|
||
Securities, held-to-maturity
|
—
|
|
|
146,352
|
|
||
Commercial mortgage loans, net
|
2,653,826
|
|
|
1,641,856
|
|
||
Subordinate loans, net
|
1,025,932
|
|
|
1,051,236
|
|
||
Investment in unconsolidated joint venture
|
—
|
|
|
22,103
|
|
||
Derivative assets, net
|
—
|
|
|
5,906
|
|
||
Loan proceeds held by servicer
|
302,756
|
|
|
—
|
|
||
Other assets
|
28,420
|
|
|
20,995
|
|
||
Total Assets
|
$
|
4,088,605
|
|
|
$
|
3,482,977
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Secured debt arrangements, net (net of deferred financing costs of $14,348 and $6,763 in 2017 and 2016, respectively)
|
$
|
1,330,847
|
|
|
$
|
1,139,803
|
|
Convertible senior notes, net
|
584,897
|
|
|
249,994
|
|
||
Participations sold
|
—
|
|
|
84,979
|
|
||
Derivative liabilities, net
|
5,644
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities
|
70,906
|
|
|
68,959
|
|
||
Payable to related party
|
8,168
|
|
|
7,015
|
|
||
Total Liabilities
|
2,000,462
|
|
|
1,550,750
|
|
||
Commitments and Contingencies (see Note 17)
|
—
|
|
|
—
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized:
|
|
|
|
|
|||
Series A preferred stock, 0 and 3,450,000 shares issued and outstanding ($0 and $86,250 aggregate liquidation preference) in 2017 and 2016, respectively
|
—
|
|
|
35
|
|
||
Series B preferred stock, 6,770,393 and 8,000,000 shares issued and outstanding ($169,260 and $200,000 aggregate liquidation preference) in 2017 and 2016, respectively
|
68
|
|
|
80
|
|
||
Series C preferred stock, 6,900,000 shares issued and outstanding ($172,500 aggregate liquidation preference) in 2017 and 2016
|
69
|
|
|
69
|
|
||
Common stock, $0.01 par value, 450,000,000 shares authorized, 107,121,235 and 91,422,676 shares issued and outstanding in 2017 and 2016, respectively
|
1,071
|
|
|
914
|
|
||
Additional paid-in-capital
|
2,170,078
|
|
|
1,983,010
|
|
||
Accumulated deficit
|
(83,143
|
)
|
|
(48,070
|
)
|
||
Accumulated other comprehensive loss
|
—
|
|
|
(3,811
|
)
|
||
Total Stockholders’ Equity
|
2,088,143
|
|
|
1,932,227
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
4,088,605
|
|
|
$
|
3,482,977
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net interest income:
|
|
|
|
|
|
||||||
Interest income from securities
|
$
|
10,466
|
|
|
$
|
27,586
|
|
|
$
|
33,188
|
|
Interest income from securities, held to maturity
|
4,132
|
|
|
11,469
|
|
|
12,054
|
|
|||
Interest income from commercial mortgage loans
|
158,632
|
|
|
102,927
|
|
|
56,092
|
|
|||
Interest income from subordinate loans
|
165,291
|
|
|
122,394
|
|
|
90,830
|
|
|||
Interest expense
|
(78,057
|
)
|
|
(63,759
|
)
|
|
(48,861
|
)
|
|||
Net interest income
|
260,464
|
|
|
200,617
|
|
|
143,303
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative expenses (includes equity-based compensation of $13,314 in 2017, $7,090 in 2016 and $4,387 in 2015)
|
(20,725
|
)
|
|
(24,983
|
)
|
|
(9,492
|
)
|
|||
Management fees to related party
|
(31,652
|
)
|
|
(23,388
|
)
|
|
(16,619
|
)
|
|||
Total operating expenses
|
(52,377
|
)
|
|
(48,371
|
)
|
|
(26,111
|
)
|
|||
Income (loss) from unconsolidated joint venture
|
(2,847
|
)
|
|
(96
|
)
|
|
3,464
|
|
|||
Other income
|
940
|
|
|
1,094
|
|
|
1,239
|
|
|||
Provision for loan losses and impairments
|
(5,000
|
)
|
|
(15,000
|
)
|
|
—
|
|
|||
Realized gain (loss) on sale of assets
|
(42,693
|
)
|
|
3,834
|
|
|
(443
|
)
|
|||
Unrealized gain (loss) on securities
|
37,165
|
|
|
(26,099
|
)
|
|
(17,408
|
)
|
|||
Foreign currency gain (loss)
|
18,506
|
|
|
(29,284
|
)
|
|
(4,894
|
)
|
|||
Bargain purchase gain
|
—
|
|
|
40,021
|
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
(1,947
|
)
|
|
—
|
|
|
—
|
|
|||
Gain (loss) on derivative instruments (includes unrealized gains (losses) of $(11,523) in 2017, $2,608 in 2016 and $(1,063) in 2015)
|
(19,180
|
)
|
|
31,160
|
|
|
4,106
|
|
|||
Net income
|
193,031
|
|
|
157,876
|
|
|
103,256
|
|
|||
Preferred dividends
|
$
|
(36,761
|
)
|
|
$
|
(30,295
|
)
|
|
$
|
(11,884
|
)
|
Net income available to common stockholders
|
156,270
|
|
|
127,581
|
|
|
91,372
|
|
|||
Basic and diluted net income per share of common stock
|
$
|
1.54
|
|
|
$
|
1.74
|
|
|
$
|
1.54
|
|
Basic weighted average shares of common stock outstanding
|
99,859,153
|
|
|
72,371,374
|
|
|
58,674,046
|
|
|||
Diluted weighted average shares of common stock outstanding
|
101,232,610
|
|
|
73,305,101
|
|
|
59,273,280
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income available to common stockholders
|
$
|
156,270
|
|
|
$
|
127,581
|
|
|
$
|
91,372
|
|
Change in net unrealized gain on securities available-for-sale
|
—
|
|
|
—
|
|
|
678
|
|
|||
Foreign currency translation adjustment
|
3,811
|
|
|
(638
|
)
|
|
(866
|
)
|
|||
Comprehensive income
|
$
|
160,081
|
|
|
$
|
126,943
|
|
|
$
|
91,184
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||||||||||||
|
Shares
|
|
Par
|
|
Shares
|
|
Par
|
|
|||||||||||||||||||||
Balance at December 31, 2014
|
3,450,000
|
|
|
$
|
35
|
|
|
46,900,442
|
|
|
$
|
469
|
|
|
$
|
868,035
|
|
|
$
|
(10,485
|
)
|
|
$
|
(2,985
|
)
|
|
$
|
855,069
|
|
Capital increase related to Equity Incentive Plan
|
—
|
|
|
—
|
|
|
12,763
|
|
|
*
|
|
|
4,265
|
|
|
—
|
|
|
—
|
|
|
4,265
|
|
||||||
Issuance of common stock
|
—
|
|
|
—
|
|
|
20,323,529
|
|
|
203
|
|
|
343,227
|
|
|
—
|
|
|
—
|
|
|
343,430
|
|
||||||
Issuance of restricted common stock
|
—
|
|
|
—
|
|
|
65,950
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Issuance of preferred stock
|
8,000,000
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
197,600
|
|
|
—
|
|
|
—
|
|
|
197,680
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(107,432
|
)
|
|
(1
|
)
|
|
(1,740
|
)
|
|
—
|
|
|
—
|
|
|
(1,741
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,249
|
)
|
|
—
|
|
|
—
|
|
|
(1,249
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
103,256
|
|
|
—
|
|
|
103,256
|
|
||||||
Change in Other Comprehensive Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|
(188
|
)
|
||||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,884
|
)
|
|
—
|
|
|
(11,884
|
)
|
||||||
Dividends declared on common stock - $1.87 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113,215
|
)
|
|
—
|
|
|
(113,215
|
)
|
||||||
Balance at December 31, 2015
|
11,450,000
|
|
|
$
|
115
|
|
|
67,195,252
|
|
|
$
|
672
|
|
|
$
|
1,410,138
|
|
|
$
|
(32,328
|
)
|
|
$
|
(3,173
|
)
|
|
$
|
1,375,424
|
|
Capital increase related to Equity Incentive Plan
|
—
|
|
|
—
|
|
|
236,782
|
|
|
2
|
|
|
4,459
|
|
|
—
|
|
|
—
|
|
|
4,461
|
|
||||||
Issuance of common stock
|
—
|
|
|
—
|
|
|
10,500,000
|
|
|
105
|
|
|
178,080
|
|
|
—
|
|
|
—
|
|
|
178,185
|
|
||||||
Issuance of common stock- AMTG Merger
|
—
|
|
|
—
|
|
|
13,398,586
|
|
|
134
|
|
|
218,263
|
|
|
—
|
|
|
—
|
|
|
218,397
|
|
||||||
Issuance of restricted common stock
|
—
|
|
|
—
|
|
|
92,056
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Issuance of preferred stock - AMTG Merger
|
6,900,000
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
172,431
|
|
|
—
|
|
|
—
|
|
|
172,500
|
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(361
|
)
|
|
—
|
|
|
—
|
|
|
(361
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157,876
|
|
|
—
|
|
|
157,876
|
|
||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(638
|
)
|
|
(638
|
)
|
||||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,295
|
)
|
|
—
|
|
|
(30,295
|
)
|
||||||
Dividends declared on common stock - $1.84 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(143,323
|
)
|
|
—
|
|
|
(143,323
|
)
|
||||||
Balance at December 31, 2016
|
18,350,000
|
|
|
$
|
184
|
|
|
91,422,676
|
|
|
$
|
914
|
|
|
$
|
1,983,010
|
|
|
$
|
(48,070
|
)
|
|
$
|
(3,811
|
)
|
|
$
|
1,932,227
|
|
Capital increase related to Equity Incentive Plan
|
—
|
|
|
—
|
|
|
200,859
|
|
|
3
|
|
|
10,977
|
|
|
—
|
|
|
—
|
|
|
10,980
|
|
||||||
Issuance of common stock
|
—
|
|
|
—
|
|
|
15,470,000
|
|
|
154
|
|
|
279,673
|
|
|
—
|
|
|
—
|
|
|
279,827
|
|
||||||
Issuance of restricted common stock
|
—
|
|
|
—
|
|
|
27,700
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Redemption of preferred stock
|
(4,679,607
|
)
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
(116,955
|
)
|
|
—
|
|
|
—
|
|
|
(117,002
|
)
|
||||||
Preferred stock redemption charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,016
|
|
|
—
|
|
|
—
|
|
|
3,016
|
|
||||||
Issuance of convertible senior notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,002
|
|
|
—
|
|
|
—
|
|
|
11,002
|
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(645
|
)
|
|
—
|
|
|
—
|
|
|
(645
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193,031
|
|
|
—
|
|
|
193,031
|
|
||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,811
|
|
|
3,811
|
|
||||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,761
|
)
|
|
—
|
|
|
(36,761
|
)
|
||||||
Dividends declared on common stock - $1.84 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(191,343
|
)
|
|
—
|
|
|
(191,343
|
)
|
||||||
Balance at December 31, 2017
|
13,670,393
|
|
|
$
|
137
|
|
|
107,121,235
|
|
|
$
|
1,071
|
|
|
$
|
2,170,078
|
|
|
$
|
(83,143
|
)
|
|
$
|
—
|
|
|
$
|
2,088,143
|
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
193,031
|
|
|
$
|
157,876
|
|
|
$
|
103,256
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Amortization of discount/premium and PIK
|
(48,062
|
)
|
|
(10,679
|
)
|
|
(11,211
|
)
|
|||
Amortization of deferred financing costs
|
6,669
|
|
|
4,607
|
|
|
2,992
|
|
|||
Equity-based compensation
|
10,977
|
|
|
4,464
|
|
|
4,266
|
|
|||
Unrealized (gain) loss on securities
|
(37,165
|
)
|
|
26,099
|
|
|
17,408
|
|
|||
Provision for loan losses and impairment
|
5,000
|
|
|
15,000
|
|
|
—
|
|
|||
Income (loss) from unconsolidated joint venture
|
2,259
|
|
|
97
|
|
|
(3,480
|
)
|
|||
Foreign currency (gain) loss
|
(18,645
|
)
|
|
28,790
|
|
|
5,192
|
|
|||
Realized (gain) loss on derivative instruments
|
289
|
|
|
(28,552
|
)
|
|
(5,169
|
)
|
|||
Unrealized (gain) loss on derivative instruments
|
11,523
|
|
|
(2,608
|
)
|
|
1,063
|
|
|||
Realized (gain) loss on sale of asset
|
42,693
|
|
|
(3,834
|
)
|
|
443
|
|
|||
Bargain purchase gain
|
—
|
|
|
(40,021
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accrued interest receivable
|
(3,820
|
)
|
|
(27,773
|
)
|
|
(30,220
|
)
|
|||
Loan proceeds held by servicer
|
(6,306
|
)
|
|
—
|
|
|
—
|
|
|||
Other assets
|
(1,372
|
)
|
|
2,194
|
|
|
120
|
|
|||
Accounts payable, accrued expenses and other liabilities
|
(3,351
|
)
|
|
(8,496
|
)
|
|
1,405
|
|
|||
Payable to related party
|
1,153
|
|
|
1,718
|
|
|
2,057
|
|
|||
Net cash (used in) provided by operating activities
|
154,873
|
|
|
118,882
|
|
|
88,122
|
|
|||
Cash flows used in investing activities:
|
|
|
|
|
|
||||||
Funding of commercial mortgage loans
|
(1,218,492
|
)
|
|
(850,411
|
)
|
|
(641,954
|
)
|
|||
Funding of subordinate loans
|
(610,266
|
)
|
|
(285,318
|
)
|
|
(705,068
|
)
|
|||
Payments received on commercial mortgage loans
|
218,002
|
|
|
206,573
|
|
|
103,963
|
|
|||
Payments received on subordinate loans
|
376,727
|
|
|
120,806
|
|
|
378,242
|
|
|||
Funding of derivative instruments
|
—
|
|
|
—
|
|
|
(327
|
)
|
|||
Origination and exit fees received on commercial mortgage loans and subordinate loans
|
27,904
|
|
|
12,500
|
|
|
17,939
|
|
|||
Funding of unconsolidated joint venture
|
(726
|
)
|
|
(362
|
)
|
|
(3,929
|
)
|
|||
Funding of other assets
|
(1,379
|
)
|
|
(1,640
|
)
|
|
(8
|
)
|
|||
Proceeds (payments) on settlements of derivative instruments
|
(201
|
)
|
|
28,552
|
|
|
5,169
|
|
|||
Decrease (increase) in collateral held related to derivative contracts
|
(4,952
|
)
|
|
2,480
|
|
|
—
|
|
|||
Proceeds from sale of securities
|
295,681
|
|
|
97,885
|
|
|
23,629
|
|
|||
Proceeds from sale of investments in unconsolidated joint venture
|
24,498
|
|
|
—
|
|
|
20,794
|
|
|||
Payments received on securities
|
25,960
|
|
|
35,623
|
|
|
8,735
|
|
|||
Payments received on securities, held-to-maturity
|
146,530
|
|
|
6,720
|
|
|
1,750
|
|
|||
Payments received on other assets
|
—
|
|
|
132
|
|
|
189
|
|
|||
Proceeds from sale of AMTG assets, net
|
—
|
|
|
1,508,198
|
|
|
—
|
|
|||
ARI Investment in AMTG, net of cash acquired
|
—
|
|
|
189,795
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
(720,714
|
)
|
|
1,071,533
|
|
|
(790,876
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
279,816
|
|
|
178,185
|
|
|
343,430
|
|
|||
Proceeds from issuance of preferred stock
|
—
|
|
|
—
|
|
|
197,680
|
|
|||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(1,741
|
)
|
|||
Redemption of preferred stock
|
(116,990
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of offering costs
|
(924
|
)
|
|
(406
|
)
|
|
(987
|
)
|
|||
Proceeds from secured debt arrangements
|
1,239,515
|
|
|
721,992
|
|
|
778,675
|
|
|||
Repayments of secured debt arrangements
|
(1,045,614
|
)
|
|
(501,200
|
)
|
|
(475,094
|
)
|
|||
Repayments of AMTG repurchase agreement borrowings
|
—
|
|
|
(1,254,517
|
)
|
|
—
|
|
|||
Proceeds from issuance of convertible senior notes
|
343,275
|
|
|
—
|
|
|
—
|
|
|||
Repayments of participations sold
|
(85,081
|
)
|
|
(4,372
|
)
|
|
(1,246
|
)
|
|||
Payment of deferred financing costs
|
(14,254
|
)
|
|
(4,017
|
)
|
|
(2,900
|
)
|
|||
Dividends on common stock
|
(183,877
|
)
|
|
(132,213
|
)
|
|
(100,849
|
)
|
|||
Dividends on preferred stock
|
(35,807
|
)
|
|
(27,956
|
)
|
|
(7,440
|
)
|
|||
Net cash provided by (used in) financing activities
|
380,059
|
|
|
(1,024,504
|
)
|
|
729,528
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(185,782
|
)
|
|
165,911
|
|
|
26,774
|
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
263,453
|
|
|
97,542
|
|
|
70,768
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
77,671
|
|
|
$
|
263,453
|
|
|
$
|
97,542
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
55,835
|
|
|
$
|
52,708
|
|
|
$
|
43,209
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Dividend declared, not yet paid
|
$
|
56,576
|
|
|
$
|
51,278
|
|
|
$
|
37,828
|
|
Deferred financing costs, not yet paid
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Offering costs payable
|
$
|
—
|
|
|
$
|
279
|
|
|
$
|
296
|
|
Loan proceeds held by servicer
|
$
|
302,756
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fair value of assets acquired from AMTG
|
$
|
—
|
|
|
$
|
1,936,260
|
|
|
$
|
—
|
|
Fair value of liabilities assumed from AMTG
|
$
|
—
|
|
|
$
|
(1,285,183
|
)
|
|
$
|
—
|
|
Fair value of common stock issued to AMTG
|
$
|
—
|
|
|
$
|
218,397
|
|
|
$
|
—
|
|
Fair value of preferred stock issued to AMTG
|
$
|
—
|
|
|
$
|
172,500
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash and cash equivalents
|
$
|
77,671
|
|
|
$
|
200,996
|
|
Restricted cash
|
—
|
|
|
62,457
|
|
||
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows
|
$
|
77,671
|
|
|
$
|
263,453
|
|
|
Fair Value as of December 31, 2017
|
|
Fair Value as of December 31, 2016
|
||||||||||||||||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||||||||||
CMBS (Fair Value Option)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
331,076
|
|
|
$
|
—
|
|
|
$
|
331,076
|
|
Derivative instruments
|
—
|
|
|
(5,644
|
)
|
|
—
|
|
|
(5,644
|
)
|
|
—
|
|
|
5,906
|
|
|
—
|
|
|
5,906
|
|
||||||||
Total
|
$
|
—
|
|
|
$
|
(5,644
|
)
|
|
$
|
—
|
|
|
$
|
(5,644
|
)
|
|
$
|
—
|
|
|
$
|
336,982
|
|
|
$
|
—
|
|
|
$
|
336,982
|
|
|
|
CMBS
|
||
Fair value at December 31, 2016
|
|
$
|
—
|
|
Transfers into Level III
(1)
|
|
254,484
|
|
|
Net realized loss on investments
|
|
(41,651
|
)
|
|
Net increase in unrealized gain on investments
|
|
38,830
|
|
|
Sales and repayments of investments
|
|
(250,464
|
)
|
|
Amortization of purchase discount, net
|
|
(1,199
|
)
|
|
Fair value at December 31, 2017
|
|
$
|
—
|
|
Security Description
|
Face
Amount |
|
Amortized
Cost |
|
Gross
Unrealized Gain |
|
Gross
Unrealized Loss |
|
Estimated
Fair Value |
||||||||||
CMBS (Fair Value Option)
|
375,861
|
|
|
368,247
|
|
|
292
|
|
|
(37,463
|
)
|
|
331,076
|
|
|||||
CMBS (Held-to-Maturity)
|
146,530
|
|
|
146,352
|
|
|
—
|
|
|
—
|
|
|
146,352
|
|
|||||
Total
|
$
|
522,391
|
|
|
$
|
514,599
|
|
|
$
|
292
|
|
|
$
|
(37,463
|
)
|
|
$
|
477,428
|
|
*
|
Ratings per Fitch Ratings, Moody’s Investors Service or Standard & Poor's.
|
Property Type
|
December 31, 2016
|
|
Office
|
34.6
|
%
|
Retail
|
29.0
|
|
Multifamily
|
12.4
|
|
Other *
|
24.0
|
|
Total
|
100
|
%
|
*
|
No other individual category comprises more than 10% of the total.
|
Location
|
December 31, 2016
|
|
South Atlantic
|
23.8
|
%
|
Middle Atlantic
|
16.7
|
|
Pacific
|
15.3
|
|
East North Central
|
10.8
|
|
Other *
|
33.4
|
|
Total
|
100
|
%
|
*
|
No other individual category comprises more than 10% of the total.
|
Loan Type
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Commercial mortgage loans, net
|
|
$
|
2,653,826
|
|
|
$
|
1,641,856
|
|
Subordinate loans, net
|
|
1,025,932
|
|
|
1,051,236
|
|
||
Total loans, net
|
|
$
|
3,679,758
|
|
|
$
|
2,693,092
|
|
|
|
Principal Balance
|
|
Deferred Fees/Other Items
(1)
|
|
Provision for Loan Loss
(2)
|
|
Carrying Value
|
||||||||
December 31, 2016
|
|
$
|
2,720,344
|
|
|
$
|
(12,252
|
)
|
|
$
|
(15,000
|
)
|
|
$
|
2,693,092
|
|
Loan fundings
|
|
1,828,758
|
|
|
—
|
|
|
—
|
|
|
1,828,758
|
|
||||
Loan repayments
|
|
(891,848
|
)
|
|
—
|
|
|
—
|
|
|
(891,848
|
)
|
||||
Unrealized gain on foreign currency translation
|
|
23,766
|
|
|
(154
|
)
|
|
—
|
|
|
23,612
|
|
||||
Provision for loan loss
(2)
|
|
—
|
|
|
—
|
|
|
(1,981
|
)
|
|
(1,981
|
)
|
||||
Deferred fees and other items
(1)
|
|
—
|
|
|
(27,424
|
)
|
|
—
|
|
|
(27,424
|
)
|
||||
PIK interest, amortization of fees and other items
(1)
|
|
25,149
|
|
|
30,400
|
|
|
—
|
|
|
55,549
|
|
||||
December 31, 2017
|
|
$
|
3,706,169
|
|
|
$
|
(9,430
|
)
|
|
$
|
(16,981
|
)
|
|
$
|
3,679,758
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Number of loans
|
|
59
|
|
|
45
|
|
||
Principal balance
|
|
$
|
3,706,169
|
|
|
$
|
2,720,344
|
|
Carrying value
|
|
$
|
3,679,758
|
|
|
$
|
2,693,092
|
|
Unfunded loan commitments
(1)
|
|
$
|
435,627
|
|
|
$
|
170,365
|
|
Weighted-average cash coupon
(2)
|
|
8.40
|
%
|
|
8.88
|
%
|
(1)
|
Unfunded loan commitments are primarily funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments are funded over the term of each loan, subject in certain cases to an expiration date.
|
(2)
|
For floating rate loans, assumes one-month LIBOR of
1.56%
and
0.77%
, as of
December 31, 2017
and
December 31, 2016
, respectively.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Property Type
|
|
Carrying
Value |
|
% of
Portfolio |
|
Carrying
Value |
|
% of
Portfolio |
Urban Retail Predevelopment
|
|
$654,736
|
|
17.8%
|
|
$491,187
|
|
18.2%
|
Hotel
|
|
645,056
|
|
17.5%
|
|
408,428
|
|
15.2%
|
Office
|
|
513,830
|
|
14.0%
|
|
255,031
|
|
9.5%
|
Residential Rental
|
|
465,057
|
|
12.6%
|
|
309,243
|
|
11.5%
|
Residential - for sale
|
|
442,179
|
|
12.0%
|
|
469,997
|
|
17.5%
|
Mixed Use
|
|
354,640
|
|
9.6%
|
|
134,797
|
|
5.0%
|
Retail Center
|
|
198,913
|
|
5.4%
|
|
209,401
|
|
7.8%
|
Healthcare
|
|
173,870
|
|
4.7%
|
|
170,549
|
|
6.3%
|
Other
|
|
154,141
|
|
4.2%
|
|
87,650
|
|
3.3%
|
Industrial
|
|
77,338
|
|
2.1%
|
|
156,809
|
|
5.8%
|
|
|
3,679,758
|
|
100.0%
|
|
2,693,092
|
|
100.0%
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Geographic Location
|
|
Carrying
Value |
|
% of
Portfolio |
|
Carrying
Value |
|
% of
Portfolio |
Manhattan, NY
|
|
$1,173,833
|
|
31.9%
|
|
$870,914
|
|
32.3%
|
Brooklyn, NY
|
|
357,611
|
|
9.7%
|
|
163,389
|
|
6.1%
|
Northeast
|
|
100,536
|
|
2.7%
|
|
137,770
|
|
5.1%
|
Midwest
|
|
683,380
|
|
18.6%
|
|
405,992
|
|
15.1%
|
Southeast
|
|
531,582
|
|
14.4%
|
|
332,276
|
|
12.3%
|
United Kingdom
|
|
303,488
|
|
8.2%
|
|
244,756
|
|
9.1%
|
West
|
|
227,024
|
|
6.2%
|
|
219,664
|
|
8.2%
|
Mid Atlantic
|
|
191,976
|
|
5.2%
|
|
263,717
|
|
9.8%
|
Other International
|
|
76,713
|
|
2.1%
|
|
—
|
|
—%
|
Southwest
|
|
33,615
|
|
0.9%
|
|
54,614
|
|
2.0%
|
Total
|
|
3,679,758
|
|
100.0%
|
|
$2,693,092
|
|
100.0%
|
|
|
December 31, 2017
|
|||||||
Risk Rating
|
|
Number of Loans
|
|
Carrying Value
|
|
% of Loan Portfolio
|
|||
1
|
|
—
|
|
$
|
—
|
|
|
—
|
%
|
2
|
|
5
|
|
399,326
|
|
|
10
|
%
|
|
3
|
|
51
|
|
3,034,358
|
|
|
83
|
%
|
|
4
|
|
1
|
|
168,208
|
|
|
5
|
%
|
|
5
|
|
2
|
|
77,866
|
|
|
2
|
%
|
|
|
|
59
|
|
$
|
3,679,758
|
|
|
100
|
%
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Interest receivable
|
$
|
23,101
|
|
|
$
|
19,281
|
|
Other
|
5,319
|
|
|
1,714
|
|
||
Total
|
$
|
28,420
|
|
|
$
|
20,995
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|||||||||||||||||||||
|
Maximum Amount of Borrowings
|
|
Borrowings Outstanding
|
|
Maturity
(1)
|
|
Weighted
Average Rate (2) |
|
Maximum Amount of Borrowings
|
|
Borrowings Outstanding
|
|
Maturity
(1)
|
|
Weighted
Average Rate (2) |
|||||||||
JPMorgan Facility
(3)
|
$
|
1,393,000
|
|
|
$
|
944,529
|
|
|
March 2020
|
|
L + 2.30%
|
|
$
|
943,000
|
|
|
$
|
657,452
|
|
|
January 2019
|
|
L + 2.25%
|
|
DB Repurchase Facility
(4)
|
566,009
|
|
|
319,286
|
|
|
March 2020
|
|
L + 2.27%
|
|
300,000
|
|
|
137,355
|
|
|
September 2019
|
|
L + 2.66%
|
|
||||
Goldman Facility
(5)
|
331,130
|
|
|
81,380
|
|
|
November 2020
|
|
L + 2.73%
|
|
N/A
|
|
|
40,657
|
|
|
April 2019
|
|
L + 3.50%
|
|
||||
Sub-total
|
2,290,139
|
|
|
1,345,195
|
|
|
|
|
L + 2.32%
|
|
|
|
835,464
|
|
|
|
|
L + 2.38%
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
UBS Facility
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
133,899
|
|
|
September 2018
|
|
2.79
|
%
|
||||
DB Facility
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
177,203
|
|
|
April 2018
|
|
3.63
|
%
|
||||
Sub-total
|
N/A
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
311,102
|
|
|
|
|
3.27
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
less: deferred financing costs
|
N/A
|
|
|
(14,348
|
)
|
|
|
|
N/A
|
|
N/A
|
|
|
(6,763
|
)
|
|
|
|
N/A
|
|
||||
Total / Weighted Average
|
$
|
2,290,139
|
|
|
$
|
1,330,847
|
|
|
|
|
L + 2.32%
|
|
|
|
|
$
|
1,139,803
|
|
|
|
|
3.18
|
%
|
|
Less than
1 year (1) |
|
1 to 3
years (1) |
|
3 to 5
years |
|
More than
5 years |
|
Total
|
||||||||||
JPMorgan Facility
|
$
|
193,567
|
|
|
$
|
750,962
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
944,529
|
|
DB Repurchase Facility
|
60,808
|
|
|
258,478
|
|
|
|
|
|
|
|
|
319,286
|
|
|||||
Goldman Facility
|
—
|
|
|
81,380
|
|
|
—
|
|
|
—
|
|
|
81,380
|
|
|||||
Total
|
$
|
254,375
|
|
|
$
|
1,090,820
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,345,195
|
|
|
|
|
2017
|
|
|
|
2016
|
||||||||||||||||
|
Balance at
December 31, 2017 |
|
Maximum Month-End
Balance |
|
Average Month-End
Balance |
|
Balance at
December 31, 2016 |
|
Maximum Month-End
Balance |
|
Average Month-End
Balance |
||||||||||||
JPMorgan Facility
|
$
|
944,529
|
|
|
$
|
986,611
|
|
|
$
|
863,717
|
|
|
$
|
657,452
|
|
|
$
|
783,528
|
|
|
$
|
660,741
|
|
DB Repurchase Facility
|
319,286
|
|
|
367,010
|
|
|
288,966
|
|
|
137,355
|
|
|
137,355
|
|
|
19,582
|
|
||||||
Goldman Facility
|
81,380
|
|
|
81,380
|
|
|
40,514
|
|
|
40,657
|
|
|
45,928
|
|
|
43,505
|
|
||||||
UBS Facility
|
—
|
|
|
133,899
|
|
|
72,716
|
|
|
133,899
|
|
|
133,899
|
|
|
133,899
|
|
||||||
DB Facility
|
—
|
|
|
177,203
|
|
|
117,768
|
|
|
177,203
|
|
|
300,005
|
|
|
246,773
|
|
||||||
Total
|
$
|
1,345,195
|
|
|
|
|
|
|
$
|
1,146,566
|
|
|
|
|
|
|
Principal Amount
|
Coupon Rate
|
Effective Rate
(1)
|
Conversion Rate
(2)
|
Maturity Date
|
Remaining Period of Amortization
|
||||
2019 Notes
|
254,750
|
|
5.50
|
%
|
6.36
|
%
|
57.49
|
|
3/15/2019
|
1.20 years
|
2022 Notes
|
345,000
|
|
4.75
|
%
|
5.61
|
%
|
50.23
|
|
8/23/2022
|
4.65 years
|
Total
|
599,750
|
|
|
|
|
|
|
(1)
|
Effective rate includes the effect of the adjustment for the conversion option (See endnote (2) below), the value of which reduced the initial liability and was recorded in additional paid-in-capital.
|
(2)
|
The Company has the option to settle any conversions in cash, shares of common stock or a combination thereof. The conversion rate represents the number of shares of common stock issuable per
$1,000
principal amount of the Notes converted, and includes adjustments relating to cash dividend payments made by the Company to stockholders that have been deferred and carried-forward in accordance with, and are not yet required to be made pursuant to, the terms of the applicable supplemental indenture.
|
Type of Derivative
|
December 31, 2017
|
||||||
|
Number of Contracts
|
|
Aggregate Notional Amount
|
|
Notional Currency
|
|
Maturity
|
Fx Contracts - GBP
|
24
|
|
177,077
|
|
GBP
|
|
January 2018- November 2020
|
Type of Derivative
|
December 31, 2016
|
||||||
|
Number of Contracts
|
|
Aggregate Notional Amount
|
|
Notional Currency
|
|
Maturity
|
Fx Contracts - GBP
|
11
|
|
148,310
|
|
GBP
|
|
January 2017- October 2017
|
|
|
|
Amount of gain (loss)
recognized in
income
|
||||||||||
|
Location of Gain (Loss) Recognized in Income
|
|
2017
|
|
2016
|
|
2015
|
||||||
Forward currency contract
|
Gain (loss) on derivative instruments - unrealized
|
|
$
|
(11,527
|
)
|
|
2,665
|
|
|
$
|
(853
|
)
|
|
Forward currency contract
|
Gain on derivative instruments - realized
|
|
(7,657
|
)
|
|
28,552
|
|
|
5,169
|
|
|||
Interest rate caps
(1)
|
Gain (loss) on derivative instruments - unrealized
|
|
4
|
|
|
(57
|
)
|
|
(210
|
)
|
|||
Sub-total
|
|
|
$
|
(19,180
|
)
|
|
$
|
31,160
|
|
|
$
|
4,106
|
|
|
|
|
|
|
|
|
|
||||||
Forward currency contract
|
Loss from unconsolidated joint venture
|
|
(587
|
)
|
|
—
|
|
|
—
|
|
|||
Total
|
|
|
$
|
(19,767
|
)
|
|
$
|
31,160
|
|
|
$
|
4,106
|
|
(1)
|
With a notional amount of
$40,185
,
$45,475
,
49,323
at
December 31, 2017
,
2016
, and 2015, respectively.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross
Amount of Recognized Liabilities |
|
Gross
Amounts Offset in the Consolidated Balance Sheet |
|
Net Amounts
of Assets Presented in the Consolidated Balance Sheet |
|
Gross
Amount of Recognized Assets |
|
Gross
Amounts Offset in the Consolidated Balance Sheet |
|
Net Amounts
of Assets Presented in the Consolidated Balance Sheet |
||||||||||||
Interest rate caps
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
23
|
|
Forward currency contract
|
(5,645
|
)
|
|
—
|
|
|
(5,645
|
)
|
|
5,883
|
|
|
—
|
|
|
5,883
|
|
||||||
Total derivative instruments
|
$
|
(5,645
|
)
|
|
$
|
1
|
|
|
$
|
(5,644
|
)
|
|
$
|
5,906
|
|
|
$
|
—
|
|
|
$
|
5,906
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Accrued dividends payable
|
$
|
56,576
|
|
|
$
|
51,278
|
|
Accrued interest payable
|
12,796
|
|
|
7,284
|
|
||
Accounts payable and other liabilities
|
1,534
|
|
|
10,397
|
|
||
Total
|
$
|
70,906
|
|
|
$
|
68,959
|
|
|
Type
|
|
Restricted Stock
|
|
RSUs
|
|
Grant Date Fair Value ($)
|
||||
Outstanding at January 1, 2015
|
|
73,927
|
|
|
610,254
|
|
|
|
|||
|
Grant
|
|
65,950
|
|
|
666,056
|
|
|
$
|
12,769
|
|
|
Vested
|
|
(32,492
|
)
|
|
(20,000
|
)
|
|
n/a
|
|
|
|
Forfeiture
|
|
—
|
|
|
(13,500
|
)
|
|
n/a
|
|
|
Outstanding at December 31, 2015
|
|
107,385
|
|
|
1,242,810
|
|
|
|
|||
|
Grant
|
|
92,056
|
|
|
903,068
|
|
|
16,477
|
|
|
|
Vested
|
|
(49,331
|
)
|
|
(397,030
|
)
|
|
n/a
|
|
|
|
Forfeiture
|
|
—
|
|
|
(45,073
|
)
|
|
n/a
|
|
|
Outstanding at December 31, 2016
|
|
150,110
|
|
|
1,703,775
|
|
|
|
|||
|
Grant
|
|
27,700
|
|
|
912,916
|
|
|
17,496
|
|
|
|
Vested
|
|
(72,249
|
)
|
|
(938,541
|
)
|
|
n/a
|
|
|
|
Forfeiture
|
|
—
|
|
|
(45,404
|
)
|
|
n/a
|
|
|
Outstanding at December 31, 2017
|
|
105,561
|
|
|
1,632,746
|
|
|
|
Vesting Year
|
Restricted Stock
|
|
RSU
|
|
Total Awards
|
|||
2018
|
67,934
|
|
|
758,505
|
|
|
826,439
|
|
2019
|
32,733
|
|
|
569,909
|
|
|
602,642
|
|
2020
|
4,894
|
|
|
304,332
|
|
|
309,226
|
|
Total
|
105,561
|
|
|
1,632,746
|
|
|
1,738,307
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Value |
|
Estimated
Fair Value |
|
Carrying
Value |
|
Estimated
Fair Value |
||||||||
Cash and cash equivalents
|
$
|
77,671
|
|
|
$
|
77,671
|
|
|
$
|
200,996
|
|
|
$
|
200,996
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
62,457
|
|
|
62,457
|
|
||||
Securities, held-to-maturity
|
—
|
|
|
—
|
|
|
146,352
|
|
|
146,489
|
|
||||
Commercial first mortgage loans, net
|
2,653,826
|
|
|
2,657,262
|
|
|
1,641,856
|
|
|
1,648,896
|
|
||||
Subordinate loans, net
|
1,025,932
|
|
|
1,029,390
|
|
|
1,051,236
|
|
|
1,060,882
|
|
||||
Secured debt arrangements
|
(1,345,195
|
)
|
|
(1,345,195
|
)
|
|
(1,146,566
|
)
|
|
(1,146,807
|
)
|
||||
2019 Notes
|
(251,935
|
)
|
|
(276,506
|
)
|
|
(249,994
|
)
|
|
(268,124
|
)
|
||||
2022 Notes
|
(332,962
|
)
|
|
(350,175
|
)
|
|
—
|
|
|
—
|
|
||||
Participations sold
|
—
|
|
|
—
|
|
|
(84,979
|
)
|
|
(85,072
|
)
|
|
For the year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
193,031
|
|
|
$
|
157,876
|
|
|
$
|
103,256
|
|
Preferred dividends
|
(36,761
|
)
|
|
(30,295
|
)
|
|
(11,884
|
)
|
|||
Net income available to common stockholders
|
156,270
|
|
|
127,581
|
|
|
91,372
|
|
|||
Dividends declared on common stock
|
(188,431
|
)
|
|
(141,236
|
)
|
|
(111,864
|
)
|
|||
Dividends on participating securities
|
(2,913
|
)
|
|
(2,087
|
)
|
|
(1,350
|
)
|
|||
Net loss attributable to common stockholders
|
$
|
(35,074
|
)
|
|
$
|
(15,742
|
)
|
|
$
|
(21,842
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average shares of common stock outstanding
|
99,859,153
|
|
|
72,371,374
|
|
|
58,674,046
|
|
|||
Diluted weighted average shares of common stock outstanding
|
101,232,610
|
|
|
73,305,101
|
|
|
59,273,280
|
|
|||
Basic and diluted net income per weighted average share of common stock
|
|
|
|
|
|
||||||
Distributable Earnings
|
$
|
1.89
|
|
|
$
|
1.96
|
|
|
$
|
1.91
|
|
Undistributed income (loss)
|
(0.35
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.37
|
)
|
|
Basic and diluted net income per share of common stock
|
$
|
1.54
|
|
|
$
|
1.74
|
|
|
$
|
1.54
|
|
Consideration Paid:
|
$ (in thousands)
|
|||
|
Cash
|
$
|
220,159
|
|
|
Common stock issued
|
218,397
|
|
|
|
Preferred stock assumed
|
172,500
|
|
|
|
Total consideration paid
|
$
|
611,056
|
|
|
|
|
||
Assets acquired:
|
|
|||
|
Cash and cash equivalents
|
399,402
|
|
|
|
Restricted cash
|
10,552
|
|
|
|
Investments
|
1,491,484
|
|
|
|
Other assets
|
34,822
|
|
|
|
|
|
||
Liabilities assumed:
|
|
|||
|
Borrowings under repurchase agreements
|
(1,254,518
|
)
|
|
|
Other liabilities
|
(30,665
|
)
|
|
|
|
|
||
|
Net assets acquired
|
651,077
|
|
|
|
|
|
||
|
Bargain purchase gain
|
$
|
40,021
|
|
|
|
|
Twelve Months Ended
|
Twelve Months Ended
|
||||
(in thousands, except per share data)
|
|
December 31, 2016
|
December 31, 2015
|
|||||
Total revenue
|
|
|
$
|
349,948
|
|
$
|
352,264
|
|
Net income attributable to common stockholders
|
89,877
|
|
44,547
|
|
||||
|
|
|
|
|
||||
Common shares outstanding at December 31, 2016
|
91,422,676
|
|
67,195,252
|
|
||||
Net income per common share, basic and diluted
|
$
|
0.98
|
|
$
|
0.66
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||
Net interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest income from securities
|
$
|
3,256
|
|
|
$
|
8,049
|
|
|
$
|
3,366
|
|
|
$
|
7,607
|
|
|
$
|
2,625
|
|
|
$
|
8,029
|
|
|
$
|
1,219
|
|
|
$
|
3,901
|
|
Interest income from securities, held-to-maturity
|
2,798
|
|
|
2,896
|
|
|
1,334
|
|
|
2,826
|
|
|
—
|
|
|
2,875
|
|
|
—
|
|
|
2,872
|
|
||||||||
Interest income from commercial mortgage loans
|
34,398
|
|
|
21,127
|
|
|
37,089
|
|
|
24,140
|
|
|
41,203
|
|
|
27,460
|
|
|
45,942
|
|
|
30,200
|
|
||||||||
Interest income from subordinate loans
|
34,390
|
|
|
29,375
|
|
|
39,640
|
|
|
28,067
|
|
|
47,268
|
|
|
32,207
|
|
|
43,993
|
|
|
32,746
|
|
||||||||
Interest expense
|
(17,030
|
)
|
|
(14,642
|
)
|
|
(19,205
|
)
|
|
(15,722
|
)
|
|
(19,855
|
)
|
|
(17,256
|
)
|
|
(21,967
|
)
|
|
(16,139
|
)
|
||||||||
Net interest income
|
57,812
|
|
|
46,805
|
|
|
62,224
|
|
|
46,918
|
|
|
71,241
|
|
|
53,315
|
|
|
69,187
|
|
|
53,580
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
General and administrative expenses
|
(5,758
|
)
|
|
(8,185
|
)
|
|
(5,200
|
)
|
|
(4,922
|
)
|
|
(4,629
|
)
|
|
(8,352
|
)
|
|
(5,138
|
)
|
|
(3,527
|
)
|
||||||||
Management fees to related party
|
(7,432
|
)
|
|
(5,229
|
)
|
|
(7,742
|
)
|
|
(5,242
|
)
|
|
(8,309
|
)
|
|
(5,903
|
)
|
|
(8,169
|
)
|
|
(7,015
|
)
|
||||||||
Total operating expenses
|
(13,190
|
)
|
|
(13,414
|
)
|
|
(12,942
|
)
|
|
(10,164
|
)
|
|
(12,938
|
)
|
|
(14,255
|
)
|
|
(13,307
|
)
|
|
(10,542
|
)
|
||||||||
Income (loss) from unconsolidated joint venture
|
458
|
|
|
68
|
|
|
(3,305
|
)
|
|
59
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
(303
|
)
|
||||||||
Other income
|
108
|
|
|
2
|
|
|
244
|
|
|
22
|
|
|
359
|
|
|
309
|
|
|
229
|
|
|
760
|
|
||||||||
Provision for loan losses and impairments
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|
(15,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Realized Gain (loss) on sale of securities
|
(1,042
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,076
|
)
|
|
(225
|
)
|
|
(37,575
|
)
|
|
4,059
|
|
||||||||
Unrealized gain (loss) on securities
|
2,852
|
|
|
(15,074
|
)
|
|
(4,510
|
)
|
|
(11,728
|
)
|
|
13,488
|
|
|
(9,798
|
)
|
|
25,335
|
|
|
10,502
|
|
||||||||
Foreign currency gain (loss)
|
3,172
|
|
|
(4,474
|
)
|
|
6,913
|
|
|
(13,082
|
)
|
|
7,763
|
|
|
(4,369
|
)
|
|
658
|
|
|
(7,359
|
)
|
||||||||
Bargain purchase gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,021
|
|
|
—
|
|
|
—
|
|
||||||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,947
|
)
|
|
—
|
|
||||||||
Gain (loss) on derivative instruments
|
(3,045
|
)
|
|
4,703
|
|
|
(7,389
|
)
|
|
13,313
|
|
|
(7,481
|
)
|
|
4,815
|
|
|
(1,265
|
)
|
|
8,329
|
|
||||||||
Net income
|
47,125
|
|
|
18,616
|
|
|
36,235
|
|
|
10,338
|
|
|
68,356
|
|
|
69,893
|
|
|
41,315
|
|
|
59,026
|
|
||||||||
Preferred dividends
|
$
|
(9,310
|
)
|
|
$
|
(5,815
|
)
|
|
$
|
(9,310
|
)
|
|
$
|
(5,860
|
)
|
|
$
|
(11,148
|
)
|
|
$
|
(9,310
|
)
|
|
$
|
(6,993
|
)
|
|
$
|
(9,310
|
)
|
Net income available to common stockholders
|
$
|
37,815
|
|
|
$
|
12,801
|
|
|
$
|
26,925
|
|
|
$
|
4,478
|
|
|
57,208
|
|
|
$
|
60,583
|
|
|
$
|
34,322
|
|
|
$
|
49,716
|
|
|
Basic and diluted net income per share of common stock
|
$
|
0.41
|
|
|
$
|
0.18
|
|
|
$
|
0.28
|
|
|
$
|
0.06
|
|
|
$
|
0.54
|
|
|
$
|
0.83
|
|
|
$
|
0.32
|
|
|
$
|
0.60
|
|
Basic weighted average shares of common stock outstanding
|
91,612,447
|
|
|
67,385,191
|
|
|
95,428,134
|
|
|
67,402,311
|
|
|
105,446,704
|
|
|
71,919,549
|
|
|
106,721,887
|
|
|
82,670,237
|
|
||||||||
Diluted weighted average shares of common stock outstanding
|
92,998,250
|
|
|
68,327,718
|
|
|
96,796,289
|
|
|
68,374,557
|
|
|
106,812,721
|
|
|
72,861,611
|
|
|
108,095,950
|
|
|
83,548,823
|
|
||||||||
Dividend declared per share of common stock
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
Description
|
Number of Loans
|
Property Type
|
Contractual Interest Rate
(1)
|
Maturity Date
(2)
|
Periodic Payment
|
Principal Balance
|
|
Carrying Value
|
|
Principal Amount of Mortgages Subject to Delinquent Principal or Interest
|
Commercial mortgage loans individually >3%
|
|
|
|
|
|
|
|
|
||
Loan A
|
|
Urban Retail Predevelopment
|
7.80%
|
7/1/2019
|
Interest Only
|
$220,000
|
|
$221,710
|
|
—
|
Loan B
|
|
Office
|
6.30%
|
1/5/2023
|
Principal and Interest
|
182,616
|
|
180,851
|
|
—
|
Loan C
|
|
Retail Center
|
7.10%
|
5/31/2020
|
Interest Only
|
167,340
|
|
168,208
|
|
—
|
Loan D
|
|
Hotel
|
6.80%
|
9/30/2020
|
Interest Only
|
138,406
|
|
139,159
|
|
—
|
Loan E
|
|
Mixed Use
|
7.10%
|
10/1/2020
|
Interest Only
|
132,184
|
|
131,672
|
|
—
|
Loan F
|
|
Urban Retail Predevelopment
|
8.60%
|
9/1/2018
|
Interest Only
|
127,180
|
|
128,133
|
|
—
|
Loan G
|
|
Mixed Use
|
6.00%
|
6/30/2019
|
Principal and Interest
|
125,000
|
|
124,256
|
|
—
|
Loan H
|
|
Office
|
6.90%
|
12/1/2022
|
Principal and Interest
|
122,651
|
|
120,199
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage loans individually <3%
|
|
|
|
|
|
|
|
|||
First Mortgage
|
27
|
Hotel, Mixed Use, Office, Other, Residential-for rent, Residential-for sale, Retail Center, Urban Retail Predevelopment
|
6.06% - 8.31%
|
2018 - 2022
|
Principal and Interest /
Interest Only |
1,456,494
|
|
1,439,637
|
|
—
|
Total Commercial mortgage loans
|
|
|
|
$2,671,871
|
|
$2,653,826
|
|
—
|
||
|
|
|
|
|
|
|
|
|
|
|
Subordinate loans individually >3%
(3)
|
|
|
|
|
|
|
|
|
||
Loan I
|
|
Residential-for sale
|
15.80%
|
7/1/2020
|
Interest Only
|
115,490
|
|
115,776
|
|
—
|
Loan J
|
|
Healthcare
|
11.60%
|
10/11/2021
|
Interest Only
|
129,305
|
|
128,785
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Subordinate loans individually <3%
(3)
|
|
|
|
|
|
|
|
|
||
Subordinate Mortgage
|
22
|
Healthcare, Hotel, Industrial, Mixed Use, Office, Other, Residential-for rent, Residential-for sale
|
6.81% - 19.06%
|
2018 - 2027
|
Principal and Interest /
Interest Only |
789,503
|
|
781,372
|
|
—
|
Total Subordinate loans
|
|
|
|
$1,034,298
|
|
$1,025,932
|
|
—
|
||
|
|
|
|
|
|
|
|
|
|
|
Total loans
(4)
|
|
|
|
|
|
$3,706,169
|
|
$3,679,758
|
|
—
|
(1)
|
Assumes
1.56%
1 month Libor rate for all floating rate loans
|
(2)
|
Assumes all extension options are exercised.
|
(3)
|
Subject to prior liens.
|
(4)
|
The aggregate cost for federal income tax purposes is
$3,696,739
.
|
|
|
|
|
Year Ended
|
|
Year Ended
|
||||
Reconciliation of Carrying Amount of Loans
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Balance at beginning of year
|
|
$
|
2,693,092
|
|
|
$
|
1,925,652
|
|
||
Loan fundings
(1)
|
|
1,828,758
|
|
|
1,127,039
|
|
||||
Loan repayments
|
|
(891,848
|
)
|
|
(331,189
|
)
|
||||
Participation sold
|
|
—
|
|
|
(24,051
|
)
|
||||
Unrealized gain (loss) on foreign currency translation
|
|
23,612
|
|
|
(33,383
|
)
|
||||
Discount accretion
|
|
—
|
|
|
13,656
|
|
||||
Provision for loan losses
(2)
|
|
(1,981
|
)
|
|
(15,000
|
)
|
||||
Deferred Fees
|
|
(27,424
|
)
|
|
—
|
|
||||
PIK interest, amortization of fees and other items
|
|
55,549
|
|
|
30,368
|
|
||||
Balance at the close of year
|
|
$
|
3,679,758
|
|
|
$
|
2,693,092
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedule.
|
(1)
|
Financial Statements:
|
(2)
|
Financial Statement Schedule:
|
(3)
|
Exhibits Files:
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
Filed herewith.
|
|
Apollo Commercial Real Estate Finance, Inc.
|
||
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
|
|
Stuart A. Rothstein
|
|
|
|
President and Chief Executive Officer
|
February 14, 2018
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
|
|
Stuart A. Rothstein
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Jai Agarwal
|
|
|
|
Jai Agarwal
Chief Financial Officer, Treasurer, Secretary
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Jeffrey M. Gault
|
|
|
|
Jeffrey M. Gault
Director
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Mark C. Biderman
|
|
|
|
Mark C. Biderman
Director
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Robert A. Kasdin
|
|
|
|
Robert A. Kasdin
Director
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Eric L. Press
|
|
|
|
Eric L. Press
Director
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Scott S. Prince
|
|
|
|
Scott S. Prince
Director
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Michael E. Salvati
|
|
|
|
Michael E. Salvati
Director
|
|
|
|
|
February 14, 2018
|
By:
|
|
/s/ Cindy Z. Michael
|
|
|
|
Cindy Z. Michel
Director
|
1.
|
Registration Statement No. 333-221483 on Form S-3 pertaining to Apollo Commercial Real Estate Finance Inc.'s Direct Stock Purchase and Dividend Reinvestment Plan
|
2.
|
Registration Statement No. 333-203971 on Form S-3 pertaining to the offering from time to time of Common Stock, Preferred Stock, Depositary Shares, Debt Securities, Warrants & Rights
|
3.
|
Registration Statement No. 333-200177 on Form S-3 pertaining to Apollo Commercial Real Estate Finance, Inc.’s Direct Stock Purchase and Dividend Reinvestment Plan
|
4.
|
Registration Statement No. 333-214478 on Form S-3 pertaining to the offering and resale from time to time of 8,823,529 shares of Common Stock and 8,000,000 shares of 8.00% Fixed-to-Floating Series B Cumulative Redeemable Perpetual Preferred Stock
|
5.
|
Registration Statement No. 333-177556 on Form S-3 in pertaining to the offering and resale from time to time of 3,495,000 shares of Common Stock
|
6.
|
Registration Statement No. 333-203972 on Form S-8 pertaining to the Apollo Commercial Real Estate Finance, Inc., 2009 Equity Incentive Plan
|
7.
|
Registration Statement No. 333-162246 on Form S-8 pertaining to the Apollo Commercial Real Estate Finance, Inc., 2009 Equity Incentive Plan
|
1.
|
I have reviewed this annual report on Form 10-K of Apollo Commercial Real Estate Finance, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and |
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 14, 2018
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
Name:
|
|
Stuart A. Rothstein
|
|
Title:
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Apollo Commercial Real Estate Finance, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report; |
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and |
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 14, 2018
|
By:
|
|
/s/ Jai Agarwal
|
|
Name:
|
|
Jai Agarwal
|
|
Title:
|
|
Chief Financial Officer, Treasurer and Secretary
|
Date: February 14, 2018
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
Name:
|
|
Stuart A. Rothstein
|
|
Title:
|
|
President and Chief Executive Officer
|
Date: February 14, 2018
|
By:
|
|
/s/ Jai Agarwal
|
|
Name:
|
|
Jai Agarwal
|
|
Title:
|
|
Chief Financial Officer, Treasurer and Secretary
|