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x
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Maryland
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27-0467113
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Large accelerated filer
|
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x
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Accelerated filer
|
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¨
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|
|
|
|
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
|
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¨
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|
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Emerging growth company
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¨
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Page
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March 31, 2018
|
|
December 31, 2017
|
||||
Assets:
|
|
|
|
||||
Cash
|
$
|
98,310
|
|
|
$
|
77,671
|
|
Commercial mortgage loans, net (includes $2,176,126 and $2,148,368 pledged as collateral under secured debt arrangements in 2018 and 2017, respectively)
|
3,029,240
|
|
|
2,653,826
|
|
||
Subordinate loans, net
|
1,038,254
|
|
|
1,025,932
|
|
||
Loan proceeds held by servicer
|
30,281
|
|
|
302,756
|
|
||
Other assets
|
46,087
|
|
|
28,420
|
|
||
Total Assets
|
$
|
4,242,172
|
|
|
$
|
4,088,605
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Secured debt arrangements, net (net of deferred financing costs of $14,037 and $14,348 in 2018 and 2017, respectively)
|
$
|
1,212,749
|
|
|
$
|
1,330,847
|
|
Convertible senior notes, net
|
585,972
|
|
|
584,897
|
|
||
Derivative liabilities, net
|
14,499
|
|
|
5,644
|
|
||
Accounts payable, accrued expenses and other liabilities
|
73,330
|
|
|
70,906
|
|
||
Payable to related party
|
8,092
|
|
|
8,168
|
|
||
Total Liabilities
|
1,894,642
|
|
|
2,000,462
|
|
||
Commitments and Contingencies (see Note 15)
|
|
|
|
|
|
||
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, 122,992,231 and 107,121,235 shares issued and outstanding in 2018 and 2017, respectively
|
1,230
|
|
|
1,071
|
|
||
Additional paid-in-capital
|
2,444,036
|
|
|
2,170,078
|
|
||
Accumulated deficit
|
(97,873
|
)
|
|
(83,143
|
)
|
||
Total Stockholders’ Equity
|
2,347,530
|
|
|
2,088,143
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
4,242,172
|
|
|
$
|
4,088,605
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net interest income:
|
|
|
|
||||
Interest income from commercial mortgage loans
|
$
|
52,114
|
|
|
$
|
34,398
|
|
Interest income from subordinate loans
|
33,853
|
|
|
34,390
|
|
||
Interest income from securities
|
—
|
|
|
6,054
|
|
||
Interest expense
|
(22,740
|
)
|
|
(17,030
|
)
|
||
Net interest income
|
63,227
|
|
|
57,812
|
|
||
Operating expenses:
|
|
|
|
||||
General and administrative expenses (includes equity-based compensation of $3,342 and $3,791 in 2018 and 2017, respectively)
|
(4,998
|
)
|
|
(5,758
|
)
|
||
Management fees to related party
|
(8,092
|
)
|
|
(7,432
|
)
|
||
Total operating expenses
|
(13,090
|
)
|
|
(13,190
|
)
|
||
Income from unconsolidated joint venture
|
—
|
|
|
458
|
|
||
Other income
|
203
|
|
|
108
|
|
||
Realized loss on sale of assets
|
—
|
|
|
(1,042
|
)
|
||
Unrealized gain on securities
|
—
|
|
|
2,852
|
|
||
Foreign currency gain
|
10,125
|
|
|
3,172
|
|
||
Loss on derivative instruments (includes unrealized losses of $(8,855) and $(2,889) in 2018 and 2017, respectively)
|
(11,032
|
)
|
|
(3,045
|
)
|
||
Net income
|
49,433
|
|
|
47,125
|
|
||
Preferred dividends
|
$
|
(6,835
|
)
|
|
$
|
(9,310
|
)
|
Net income available to common stockholders
|
42,598
|
|
|
37,815
|
|
||
Net income per share of common stock
|
$
|
0.38
|
|
|
$
|
0.41
|
|
Basic weighted average shares of common stock outstanding
|
110,211,853
|
|
|
91,612,447
|
|
||
Diluted weighted average shares of common stock outstanding
|
111,871,429
|
|
|
92,998,250
|
|
||
Dividend declared per share of common stock
|
$
|
0.46
|
|
|
$
|
0.46
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income available to common stockholders
|
$
|
42,598
|
|
|
$
|
37,815
|
|
Foreign currency translation adjustment
|
—
|
|
|
251
|
|
||
Comprehensive income
|
$
|
42,598
|
|
|
$
|
38,066
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-In-Capital
|
|
Accumulated
Deficit
|
|
Total
|
||||||||||||||||
|
Shares
|
|
Par
|
|
Shares
|
|
Par
|
|
|||||||||||||||||
Balance at January 1, 2018
|
13,670,393
|
|
|
$
|
137
|
|
|
107,121,235
|
|
|
$
|
1,071
|
|
|
$
|
2,170,078
|
|
|
$
|
(83,143
|
)
|
|
$
|
2,088,143
|
|
Capital increase (decrease) related to Equity Incentive Plan
|
—
|
|
|
—
|
|
|
345,996
|
|
|
4
|
|
|
(1,389
|
)
|
|
—
|
|
|
(1,385
|
)
|
|||||
Issuance of common stock
|
—
|
|
|
—
|
|
|
15,525,000
|
|
|
155
|
|
|
275,724
|
|
|
—
|
|
|
275,879
|
|
|||||
Offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(377
|
)
|
|
—
|
|
|
(377
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,433
|
|
|
49,433
|
|
|||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,835
|
)
|
|
(6,835
|
)
|
|||||
Dividends declared on common stock - $0.46 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57,328
|
)
|
|
(57,328
|
)
|
|||||
Balance at March 31, 2018
|
13,670,393
|
|
$
|
137
|
|
|
122,992,231
|
|
$
|
1,230
|
|
|
$
|
2,444,036
|
|
|
$
|
(97,873
|
)
|
|
$
|
2,347,530
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows (used in) provided by operating activities:
|
|
|
|
||||
Net income
|
$
|
49,433
|
|
|
$
|
47,125
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Amortization of discount/premium and PIK
|
(15,695
|
)
|
|
(3,517
|
)
|
||
Amortization of deferred financing costs
|
2,545
|
|
|
1,203
|
|
||
Equity-based compensation
|
(1,385
|
)
|
|
1,461
|
|
||
Unrealized gain on securities
|
—
|
|
|
(2,852
|
)
|
||
Income from unconsolidated joint venture
|
—
|
|
|
(458
|
)
|
||
Foreign currency gain
|
(9,853
|
)
|
|
(2,808
|
)
|
||
Unrealized loss on derivative instruments
|
8,855
|
|
|
2,897
|
|
||
Realized loss on sale of assets
|
—
|
|
|
1,042
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Proceeds received from PIK
|
55,000
|
|
|
—
|
|
||
Other assets
|
(2,620
|
)
|
|
(10,926
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
2,075
|
|
|
(8,011
|
)
|
||
Payable to related party
|
(76
|
)
|
|
418
|
|
||
Net cash (used in) provided by operating activities
|
88,279
|
|
|
25,574
|
|
||
Cash flows used in investing activities:
|
|
|
|
||||
New funding of commercial mortgage loans
|
(476,951
|
)
|
|
(258,950
|
)
|
||
Add-on funding of commercial mortgage loans
|
(13,185
|
)
|
|
(60,649
|
)
|
||
New funding of subordinate loans
|
(11,687
|
)
|
|
(117,500
|
)
|
||
Add-on funding of subordinate loans
|
(5,208
|
)
|
|
(55,182
|
)
|
||
Payments received on commercial mortgage loans
|
90,547
|
|
|
6,336
|
|
||
Payments received on subordinate loans
|
257,548
|
|
|
37,738
|
|
||
Origination and exit fees received on commercial mortgage and subordinate loans
|
19,085
|
|
|
6,294
|
|
||
Funding of unconsolidated joint venture
|
—
|
|
|
(726
|
)
|
||
Funding of other assets
|
—
|
|
|
(1,379
|
)
|
||
Increase in collateral held related to derivative contracts
|
(15,220
|
)
|
|
(960
|
)
|
||
Payments and proceeds received on securities
|
—
|
|
|
70,033
|
|
||
Net cash (used in) provided by investing activities
|
(155,071
|
)
|
|
(374,945
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
275,879
|
|
|
—
|
|
||
Payment of offering costs
|
(38
|
)
|
|
(58
|
)
|
||
Proceeds from secured debt arrangements
|
416,549
|
|
|
407,955
|
|
||
Repayments of secured debt arrangements
|
(538,562
|
)
|
|
(67,286
|
)
|
||
Repayments of participations sold
|
—
|
|
|
(434
|
)
|
||
Payment of deferred financing costs
|
(2,234
|
)
|
|
(4,394
|
)
|
||
Dividends on common stock
|
(57,328
|
)
|
|
(42,947
|
)
|
||
Dividends on preferred stock
|
(6,835
|
)
|
|
(9,310
|
)
|
||
Net cash (used in) provided by financing activities
|
87,431
|
|
|
283,526
|
|
||
Net increase (decrease) in cash and cash equivalents
|
20,639
|
|
|
(65,845
|
)
|
||
Cash and restricted cash, beginning of period
|
77,671
|
|
|
263,452
|
|
||
Cash and restricted cash, end of period
|
$
|
98,310
|
|
|
$
|
197,607
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
26,517
|
|
|
$
|
18,965
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
||||
Dividend declared, not yet paid
|
$
|
63,598
|
|
|
$
|
51,109
|
|
Offering costs payable
|
$
|
339
|
|
|
$
|
222
|
|
Loan proceeds held by servicer
|
$
|
30,281
|
|
|
$
|
—
|
|
|
Balance at March 31, 2018
|
|
Balance at March 31, 2017
|
||||
Cash
|
$
|
98,310
|
|
|
$
|
142,905
|
|
Restricted cash
|
$
|
—
|
|
|
$
|
54,702
|
|
Total cash and restricted cash shown in the condensed consolidated statement of cash flows
|
$
|
98,310
|
|
|
$
|
197,607
|
|
|
Fair Value as of March 31, 2018
|
|
Fair Value as of December 31, 2017
|
||||||||||||||||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||||||||||
Derivative instruments, net
|
$
|
—
|
|
|
$
|
(14,499
|
)
|
|
$
|
—
|
|
|
$
|
(14,499
|
)
|
|
$
|
—
|
|
|
$
|
(5,644
|
)
|
|
$
|
—
|
|
|
$
|
(5,644
|
)
|
Loan Type
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Commercial mortgage loans, net
|
|
$
|
3,029,240
|
|
|
$
|
2,653,826
|
|
Subordinate loans, net
|
|
1,038,254
|
|
|
1,025,932
|
|
||
Total loans, net
|
|
$
|
4,067,494
|
|
|
$
|
3,679,758
|
|
|
|
Principal Balance
|
|
Deferred Fees/Other Items
(1)
|
|
Provision for Loan Loss
(2)
|
|
Carrying Value
|
||||||||
December 31, 2017
|
|
$
|
3,706,169
|
|
|
$
|
(9,430
|
)
|
|
$
|
(16,981
|
)
|
|
$
|
3,679,758
|
|
New loan fundings
|
|
488,638
|
|
|
—
|
|
|
—
|
|
|
488,638
|
|
||||
Add-on loan fundings
|
|
18,393
|
|
|
—
|
|
|
—
|
|
|
18,393
|
|
||||
Loan repayments
|
|
(137,947
|
)
|
|
—
|
|
|
—
|
|
|
(137,947
|
)
|
||||
Unrealized gain (loss) on foreign currency translation
|
|
13,555
|
|
|
(113
|
)
|
|
—
|
|
|
13,442
|
|
||||
Deferred fees and other items
(1)
|
|
—
|
|
|
(11,561
|
)
|
|
—
|
|
|
(11,561
|
)
|
||||
PIK interest, amortization of fees and other items
(1)
|
|
10,564
|
|
|
6,207
|
|
|
—
|
|
|
16,771
|
|
||||
March 31, 2018
|
|
$
|
4,099,372
|
|
|
$
|
(14,897
|
)
|
|
$
|
(16,981
|
)
|
|
$
|
4,067,494
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Number of loans
|
|
63
|
|
|
59
|
|
||
Principal balance
|
|
$
|
4,099,372
|
|
|
$
|
3,706,169
|
|
Carrying value
|
|
$
|
4,067,494
|
|
|
$
|
3,679,758
|
|
Unfunded loan commitments
(1)
|
|
$
|
852,508
|
|
|
$
|
435,627
|
|
Weighted-average cash coupon
(2)
|
|
8.6
|
%
|
|
8.4
|
%
|
(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, based on applicable benchmark rates as of the specified dates.
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Property Type
|
|
Carrying
Value |
|
% of
Portfolio |
|
Carrying
Value |
|
% of
Portfolio |
Predevelopment
|
|
$710,992
|
|
17.5%
|
|
$654,736
|
|
17.8%
|
Residential - for sale
|
|
704,020
|
|
17.3%
|
|
442,177
|
|
12.0%
|
Hotel
|
|
654,631
|
|
16.1%
|
|
645,056
|
|
17.6%
|
Office
|
|
584,990
|
|
14.4%
|
|
513,830
|
|
14.0%
|
Residential Rental
|
|
467,605
|
|
11.5%
|
|
465,057
|
|
12.6%
|
Mixed Use
|
|
356,079
|
|
8.7%
|
|
354,640
|
|
9.6%
|
Retail Center
|
|
199,463
|
|
4.9%
|
|
198,913
|
|
5.4%
|
Healthcare
|
|
158,292
|
|
3.9%
|
|
173,870
|
|
4.7%
|
Other
|
|
154,084
|
|
3.8%
|
|
154,141
|
|
4.2%
|
Industrial
|
|
77,338
|
|
1.9%
|
|
77,338
|
|
2.1%
|
|
|
$4,067,494
|
|
100.0%
|
|
$3,679,758
|
|
100.0%
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Geographic Location
|
|
Carrying
Value |
|
% of
Portfolio |
|
Carrying
Value |
|
% of
Portfolio |
Manhattan, NY
|
|
$1,209,678
|
|
29.7%
|
|
$1,173,833
|
|
31.9%
|
Brooklyn, NY
|
|
358,425
|
|
8.8%
|
|
357,611
|
|
9.7%
|
Northeast
|
|
107,671
|
|
2.7%
|
|
100,536
|
|
2.7%
|
Midwest
|
|
737,780
|
|
18.1%
|
|
683,380
|
|
18.6%
|
Southeast
|
|
447,450
|
|
11.0%
|
|
531,582
|
|
14.4%
|
West
|
|
270,170
|
|
6.6%
|
|
227,024
|
|
6.2%
|
Mid Atlantic
|
|
182,320
|
|
4.5%
|
|
191,976
|
|
5.2%
|
Southwest
|
|
33,384
|
|
0.8%
|
|
33,615
|
|
0.9%
|
United Kingdom
|
|
645,338
|
|
15.9%
|
|
303,488
|
|
8.3%
|
Other International
|
|
75,278
|
|
1.9%
|
|
76,713
|
|
2.1%
|
Total
|
|
$4,067,494
|
|
100.0%
|
|
$3,679,758
|
|
100.0%
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||
Risk Rating
|
|
Number of Loans
|
|
Carrying Value
|
|
% of Loan Portfolio
|
|
Number of Loans
|
|
Carrying Value
|
|
% of Loan Portfolio
|
||||||
1
|
|
—
|
|
$
|
—
|
|
|
—
|
%
|
|
—
|
|
$
|
—
|
|
|
—
|
%
|
2
|
|
6
|
|
395,212
|
|
|
10
|
%
|
|
5
|
|
399,326
|
|
|
10
|
%
|
||
3
|
|
54
|
|
3,431,086
|
|
|
84
|
%
|
|
51
|
|
3,034,358
|
|
|
83
|
%
|
||
4
|
|
1
|
|
168,677
|
|
|
4
|
%
|
|
1
|
|
168,208
|
|
|
5
|
%
|
||
5
|
|
2
|
|
72,519
|
|
|
2
|
%
|
|
2
|
|
77,866
|
|
|
2
|
%
|
||
|
|
63
|
|
$
|
4,067,494
|
|
|
100
|
%
|
|
59
|
|
$
|
3,679,758
|
|
|
100
|
%
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Interest receivable
|
$
|
25,548
|
|
|
$
|
23,101
|
|
Collateral deposited under derivative agreements
|
20,150
|
|
|
4,930
|
|
||
Other
|
389
|
|
|
389
|
|
||
Total
|
$
|
46,087
|
|
|
$
|
28,420
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
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)
|
$
|
1,382,000
|
|
|
$
|
800,535
|
|
|
March 2020
|
|
USD L + 2.30%
|
|
$
|
1,393,000
|
|
|
$
|
944,529
|
|
|
March 2020
|
|
USD L + 2.30%
|
DB Repurchase Facility (USD)
(4)
|
402,390
|
|
|
157,460
|
|
|
March 2020
|
|
USD L + 2.48%
|
|
472,090
|
|
|
225,367
|
|
|
March 2020
|
|
USD L + 2.56%
|
||||
DB Repurchase Facility (GBP)
(4)
|
165,766
|
|
|
165,766
|
|
|
March 2020
|
|
GBP L + 2.60%
|
|
93,919
|
|
|
93,919
|
|
|
March 2020
|
|
GBP L + 2.60%
|
||||
Goldman Facility
(5)
|
327,750
|
|
|
103,025
|
|
|
November 2020
|
|
USD L + 2.57%
|
|
331,130
|
|
|
81,380
|
|
|
November 2020
|
|
USD L + 2.73%
|
||||
Sub-total
|
2,277,906
|
|
|
1,226,786
|
|
|
|
|
|
|
2,290,139
|
|
|
1,345,195
|
|
|
|
|
|
||||
less: deferred financing costs
|
N/A
|
|
|
(14,037
|
)
|
|
|
|
N/A
|
|
N/A
|
|
|
(14,348
|
)
|
|
|
|
N/A
|
||||
Total / Weighted Average
|
$
|
2,277,906
|
|
|
$
|
1,212,749
|
|
|
|
|
USD L + 2.35% /
|
|
$
|
2,290,139
|
|
|
$
|
1,330,847
|
|
|
|
|
USD L + 2.37% /
|
|
|
GBP L + 2.60%
|
|
|
|
|
GBP L + 2.60%
|
|
Less than
1 year (1) |
|
1 to 3
years (1) |
|
3 to 5
years |
|
More than
5 years |
|
Total
|
||||||||||
JPMorgan Facility
|
$
|
132,715
|
|
|
$
|
667,820
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
800,535
|
|
DB Repurchase Facility
|
131,419
|
|
|
191,807
|
|
|
—
|
|
|
—
|
|
|
323,226
|
|
|||||
Goldman Facility
|
—
|
|
|
103,025
|
|
|
—
|
|
|
—
|
|
|
103,025
|
|
|||||
Total
|
$
|
264,134
|
|
|
$
|
962,652
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,226,786
|
|
|
|
|
|
|
For the three months ended March 31, 2018
|
||||||||||
|
Balance at
March 31, 2018 |
|
Amortized Cost of Collateral at March 31, 2018
|
|
Maximum Month-End
Balance |
|
Average Month-End
Balance |
||||||||
JPMorgan Facility
|
$
|
800,535
|
|
|
$
|
1,372,877
|
|
|
$
|
914,040
|
|
|
$
|
786,087
|
|
DB Repurchase Facility
|
323,226
|
|
|
623,006
|
|
|
329,689
|
|
|
326,536
|
|
||||
Goldman Facility
|
103,025
|
|
|
180,243
|
|
|
103,025
|
|
|
87,312
|
|
||||
Total
|
$
|
1,226,786
|
|
|
$
|
2,176,126
|
|
|
|
|
|
|
Principal Amount
|
Coupon Rate
|
Effective Rate
(1)
|
Conversion Rate
(2)
|
Maturity Date
|
Remaining Period of Amortization
|
|||||
2019 Notes
|
$
|
254,750
|
|
5.50
|
%
|
6.36
|
%
|
57.6745
|
|
3/15/2019
|
0.95 years
|
2022 Notes
|
345,000
|
|
4.75
|
%
|
5.61
|
%
|
50.2260
|
|
8/23/2022
|
4.40 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
$1.0
million 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
|
March 31, 2018
|
||||||
|
Number of Contracts
|
|
Aggregate Notional Amount (in thousands)
|
|
Notional Currency
|
|
Maturity
|
Fx Contracts - GBP
|
31
|
|
467,737
|
|
GBP
|
|
April 2018 - November 2020
|
Type of Derivative
|
December 31, 2017
|
||||||
|
Number of Contracts
|
|
Aggregate Notional Amount (in thousands)
|
|
Notional Currency
|
|
Maturity
|
Fx Contracts - GBP
|
24
|
|
177,077
|
|
GBP
|
|
January 2018- November 2020
|
|
|
|
Amount of gain (loss)
recognized in income
|
||||||
|
|
|
Three months ended March 31,
|
||||||
|
Location of (Gain) Loss Recognized in Income
|
|
2018
|
|
2017
|
||||
Forward currency contracts
|
Loss on derivative instruments - unrealized
|
|
$
|
(8,859
|
)
|
|
$
|
(2,883
|
)
|
Forward currency contracts
|
Loss on derivative instruments - realized
|
|
(2,177
|
)
|
|
(156
|
)
|
||
Interest rate caps
(1)
|
Gain (loss) on derivative instruments - unrealized
|
|
4
|
|
|
(6
|
)
|
||
Total
|
|
|
$
|
(11,032
|
)
|
|
$
|
(3,045
|
)
|
(1)
|
With a notional amount of
$38.9
million and
$44.2
million at
March 31, 2018
, and
2017
, respectively.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
Amount of Recognized Liabilities |
|
Gross
Amounts Offset in the Condensed Consolidated Balance Sheet |
|
Net Amounts
of Assets (Liabilities) Presented in the Condensed Consolidated Balance Sheet |
|
Gross
Amount of Recognized Liabilities |
|
Gross
Amounts Offset in the Consolidated Balance Sheet |
|
Net Amounts
of Liabilities Presented in the Consolidated Balance Sheet |
||||||||||||
Interest rate caps
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Forward currency contracts
|
(18,777
|
)
|
|
4,273
|
|
|
(14,504
|
)
|
|
(5,645
|
)
|
|
—
|
|
|
(5,645
|
)
|
||||||
Total derivative instruments
|
$
|
(18,777
|
)
|
|
$
|
4,278
|
|
|
$
|
(14,499
|
)
|
|
$
|
(5,645
|
)
|
|
$
|
1
|
|
|
$
|
(5,644
|
)
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
||
Accrued dividends payable
|
$
|
63,598
|
|
|
$
|
56,576
|
|
Accrued interest payable
|
5,336
|
|
|
12,796
|
|
||
Accounts payable and other liabilities
|
4,396
|
|
|
1,534
|
|
||
Total
|
$
|
73,330
|
|
|
$
|
70,906
|
|
|
Type
|
|
Restricted Stock
|
|
RSUs
|
|
Grant Date Fair Value ($)
|
||
Outstanding at December 31, 2017
|
|
105,561
|
|
|
1,632,746
|
|
|
|
|
|
Vested
|
|
(2,749
|
)
|
|
—
|
|
|
n/a
|
Outstanding at March 31, 2018
|
|
102,812
|
|
|
1,632,746
|
|
|
|
Vesting Year
|
Restricted Stock
|
|
RSU
|
|
Total Awards
|
|||
2018
|
65,185
|
|
|
758,505
|
|
|
823,690
|
|
2019
|
32,733
|
|
|
569,909
|
|
|
602,642
|
|
2020
|
4,894
|
|
|
304,332
|
|
|
309,226
|
|
Total
|
102,812
|
|
|
1,632,746
|
|
|
1,735,558
|
|
Dividend declared per share of:
|
|
Common Stock
|
$0.46
|
Series B Preferred Stock
|
0.50
|
Series C Preferred Stock
|
0.50
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Value |
|
Estimated
Fair Value |
|
Carrying
Value |
|
Estimated
Fair Value |
||||||||
Cash
|
$
|
98,310
|
|
|
$
|
98,310
|
|
|
$
|
77,671
|
|
|
$
|
77,671
|
|
Commercial first mortgage loans, net
|
3,029,240
|
|
|
3,033,356
|
|
|
2,653,826
|
|
|
2,657,262
|
|
||||
Subordinate loans, net
|
1,038,254
|
|
|
1,035,838
|
|
|
1,025,932
|
|
|
1,029,390
|
|
||||
Secured debt arrangements
|
(1,226,786
|
)
|
|
(1,226,786
|
)
|
|
(1,345,195
|
)
|
|
(1,345,195
|
)
|
||||
2019 Notes
|
(252,270
|
)
|
|
(273,571
|
)
|
|
(251,935
|
)
|
|
(267,506
|
)
|
||||
2022 Notes
|
(333,342
|
)
|
|
(346,604
|
)
|
|
(332,962
|
)
|
|
(350,175
|
)
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
49,433
|
|
|
$
|
47,125
|
|
Preferred dividends
|
(6,835
|
)
|
|
(9,310
|
)
|
||
Net income available to common stockholders
|
42,598
|
|
|
37,815
|
|
||
Dividends declared on common stock
|
(56,577
|
)
|
|
(42,146
|
)
|
||
Dividends on participating securities
|
(751
|
)
|
|
(630
|
)
|
||
Net loss attributable to common stockholders
|
$
|
(14,730
|
)
|
|
$
|
(4,961
|
)
|
Denominator:
|
|
|
|
||||
Basic weighted average shares of common stock outstanding
|
110,211,853
|
|
|
91,612,447
|
|
||
Diluted weighted average shares of common stock outstanding
|
111,871,429
|
|
|
92,998,250
|
|
||
Net income per weighted average share of common stock
|
|
|
|
||||
Distributable earnings per share of common stock
|
$
|
0.51
|
|
|
$
|
0.46
|
|
Undistributed loss per share of common stock
|
$
|
(0.13
|
)
|
|
$
|
(0.05
|
)
|
Net income per share of common stock
|
$
|
0.38
|
|
|
$
|
0.41
|
|
Description
|
|
Amortized
Cost |
|
Weighted Average Coupon
(1)
|
|
Weighted Average All-in Yield
(1)(2)
|
|
Secured Debt
(3)
|
|
Cost of Funds
|
|
Equity at
cost (4) |
|||||||||
Commercial mortgage loans, net
|
|
$
|
3,029,240
|
|
|
7.2
|
%
|
|
7.7
|
%
|
|
$
|
1,212,749
|
|
|
4.1
|
%
|
|
$
|
1,846,772
|
|
Subordinate loans, net
|
|
1,038,254
|
|
|
12.6
|
%
|
|
13.7
|
%
|
|
—
|
|
|
—
|
|
|
1,038,254
|
|
|||
Total/Weighted Average
|
|
$
|
4,067,494
|
|
|
8.6
|
%
|
|
9.2
|
%
|
|
$
|
1,212,749
|
|
|
4.1
|
%
|
|
$
|
2,885,026
|
|
(1)
|
Weighted-Average Coupon and Weighted Average All-in-Yield are based on the applicable benchmark rates as of March 31, 2018 on the floating rate loans.
|
(2)
|
Weighted-Average All-in-Yield includes the amortization of deferred origination fees, loan origination costs and accrual of both extension and exit fees.
|
(3)
|
Net of deferred financing costs of $14.0 million.
|
(4)
|
Represents loan portfolio at amortized cost plus loan proceeds held by servicer, less secured debt outstanding.
|
|
|
Average month-end balances for the three months ended March 31, 2018
|
||||||
Description
|
|
Assets
|
|
Related debt
|
||||
Commercial mortgage loans, net
|
|
$
|
2,771,662
|
|
|
$
|
1,199,935
|
|
Subordinate loans, net
|
|
1,033,771
|
|
|
—
|
|
|
Three months ended March 31,
|
|
2018 vs. 2017
|
||||||||
|
2018
|
|
2017
|
|
|
||||||
Net interest income:
|
|
|
|
|
|
||||||
Interest income from commercial mortgage loans
|
$
|
52,114
|
|
|
$
|
34,398
|
|
|
$
|
17,716
|
|
Interest income from subordinate loans
|
33,853
|
|
|
34,390
|
|
|
(537
|
)
|
|||
Interest income from securities
|
—
|
|
|
6,054
|
|
|
(6,054
|
)
|
|||
Interest expense
|
(22,740
|
)
|
|
(17,030
|
)
|
|
(5,710
|
)
|
|||
Net interest income
|
63,227
|
|
|
57,812
|
|
|
5,415
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative expenses
|
(4,998
|
)
|
|
(5,758
|
)
|
|
760
|
|
|||
Management fees to related party
|
(8,092
|
)
|
|
(7,432
|
)
|
|
(660
|
)
|
|||
Total operating expenses
|
(13,090
|
)
|
|
(13,190
|
)
|
|
100
|
|
|||
Income from unconsolidated joint venture
|
—
|
|
|
458
|
|
|
(458
|
)
|
|||
Other income
|
203
|
|
|
108
|
|
|
95
|
|
|||
Realized loss on sale of assets
|
—
|
|
|
(1,042
|
)
|
|
1,042
|
|
|||
Unrealized gain on securities
|
—
|
|
|
2,852
|
|
|
(2,852
|
)
|
|||
Foreign currency gain
|
10,125
|
|
|
3,172
|
|
|
6,953
|
|
|||
Loss on derivative instruments
|
(11,032
|
)
|
|
(3,045
|
)
|
|
(7,987
|
)
|
|||
Net income
|
$
|
49,433
|
|
|
$
|
47,125
|
|
|
$
|
2,308
|
|
|
March 31, 2018
|
|
December 31, 2017
|
Debt-to-Equity Ratio
(1)
|
0.8x
|
|
0.9x
|
•
|
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)
|
$
|
163,234
|
|
|
$
|
689,122
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
852,356
|
|
DB Repurchase Facility
(1)
|
199,300
|
|
|
147,904
|
|
|
—
|
|
|
—
|
|
|
347,204
|
|
|||||
Goldman Facility
(1)
|
9,764
|
|
|
102,988
|
|
|
—
|
|
|
—
|
|
|
112,752
|
|
|||||
Convertible Senior Notes
|
27,866
|
|
|
289,474
|
|
|
368,003
|
|
|
—
|
|
|
685,343
|
|
|||||
Unfunded loan commitments
(2)
|
338,851
|
|
|
513,657
|
|
|
—
|
|
|
—
|
|
|
852,508
|
|
|||||
Total
|
$
|
739,015
|
|
|
$
|
1,743,145
|
|
|
$
|
368,003
|
|
|
$
|
—
|
|
|
$
|
2,850,163
|
|
(1)
|
Based on the applicable benchmark rates as of March 31, 2018 on the floating rate debt for interest payments due under the JPMorgan Facility, the DB Repurchase Facility, and the Goldman Facility.
|
(2)
|
Based on the Company's expected funding schedule, which is 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.
|
(3)
|
Assumes
underlying assets are financed through the fully extended maturity date of the facility.
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income available to common stockholders
|
$
|
42,598
|
|
|
$
|
37,815
|
|
Adjustments:
|
|
|
|
||||
Equity-based compensation expense
|
3,342
|
|
|
3,791
|
|
||
Unrealized gain on securities
|
—
|
|
|
(2,852
|
)
|
||
Unrealized loss on derivative instruments
|
11,032
|
|
|
3,045
|
|
||
Foreign currency gain, net
|
(10,362
|
)
|
|
(3,326
|
)
|
||
Amortization of the convertible senior notes related to equity reclassification
|
1,140
|
|
|
608
|
|
||
Income from unconsolidated joint venture
|
—
|
|
|
(458
|
)
|
||
Total adjustments:
|
5,152
|
|
|
808
|
|
||
Operating Earnings
|
$
|
47,750
|
|
|
$
|
38,623
|
|
|
|
|
|
||||
Realized loss and costs from sale of CMBS
|
—
|
|
|
1,042
|
|
||
Operating Earnings excluding realized loss and costs from sale of CMBS
|
47,750
|
|
|
39,665
|
|
||
Basic and diluted Operating Earnings per share of common stock
|
$
|
0.43
|
|
|
$
|
0.41
|
|
Basic and diluted Operating Earnings excluding realized loss and costs from sale of CMBS per share of common stock
|
$
|
0.43
|
|
|
$
|
0.42
|
|
Basic weighted average shares of common stock outstanding
|
110,211,853
|
|
|
91,612,447
|
|
||
Diluted weighted average shares of common stock outstanding
|
111,871,429
|
|
|
92,998,250
|
|
•
|
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.
|
|
|
|
|
50 basis point increase
|
||||||||
Currency
|
|
Net floating rate assets subject to interest rate sensitivity
(1)
|
|
Increase to net interest income (in $)
(2)
|
|
Increase to net interest income (per Share)
(2)
|
||||||
USD
|
|
$
|
1,951,156
|
|
|
$
|
9,756
|
|
|
$
|
0.08
|
|
GBP
|
|
485,438
|
|
|
2,427
|
|
|
0.02
|
|
|||
Total:
|
|
$
|
2,436,594
|
|
|
$
|
12,183
|
|
|
$
|
0.10
|
|
*
|
Filed herewith.
|
|
|
|
APOLLO COMMERCIAL REAL ESTATE FINANCE, INC.
|
|
|
|
|
May 2, 2018
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
|
|
Stuart A. Rothstein
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
By:
|
|
/s/ Jai Agarwal
|
|
|
|
Jai Agarwal
|
|
|
|
Chief Financial Officer, Treasurer and Secretary
|
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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: May 2, 2018
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
Name:
|
|
Stuart A. Rothstein
|
|
Title:
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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: May 2, 2018
|
By:
|
|
/s/ Jai Agarwal
|
|
Name:
|
|
Jai Agarwal
|
|
Title:
|
|
Chief Financial Officer, Treasurer and Secretary
|
Date: May 2, 2018
|
By:
|
|
/s/ Stuart A. Rothstein
|
|
Name:
|
|
Stuart A. Rothstein
|
|
Title:
|
|
President and Chief Executive Officer
|
Date: May 2, 2018
|
By:
|
|
/s/ Jai Agarwal
|
|
Name:
|
|
Jai Agarwal
|
|
Title:
|
|
Chief Financial Officer, Treasurer and Secretary
|